An ethanol producer purchases 10 futures contract of corn for delivery in December for a price of $4/bushel.What is the total gain or total loss to the ethanol producer if the price then increases to $5/bushel?
A. Total gain of $250,000.
B. Total loss of $50,000.
C. Total gain of $50,000.
D. Total loss of $200,000.
Answer: C. Total gain of $50,000.
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When inventories accumulate, unemployment rises.
Answer the following statement true (T) or false (F)
If a 10 percent rise in price leads to a reduction in quantity demanded of more than 10 percent,
a. demand is elastic. b. demand is inelastic. c. elasticity of demand is unitary. d. None of the above is correct.
In the presence of asymmetric information, a fixed-fee contract
A) achieves production efficiency.
B) can lead to opportunistic behavior on the part of the agent.
C) is impossible to write.
D) will result in the principal earning all of the profit.
How is the price producers receive with a subsidy calculated?
a. by subtracting the tax from the amount of the subsidy b. by adding deadweight loss to the total surplus c. by subtracting the amount of the subsidy from producer surplus d. by adding the price consumers pay to the amount of the subsidy