An agricultural economist reports that corn prices are very high this year and that corn growers are earning substantial profits. He concludes that government action is needed to direct more farmers to grow corn. Is such action necessary? Why or why not?
No government action is necessary to direct farmers to grow more corn. Farmers will see how profitable corn growing is and will plant next year's crops accordingly. We would expect a lot more farmers to grow corn..
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Suppose a pizza restaurant has two pizza ovens that may be used to bake pizzas, so the restaurant has a maximum capacity constraint that affects the shape of the firm's short-run marginal cost curve
What happens to maximum capacity segment of this curve if the firm adds another pizza oven? A) Shifts upward B) Shifts downward C) Shifts leftward D) Shifts rightward
Bonds are a safer form of investment because
a. full bond payments are made before stockholders receive any dividends b. they are guaranteed by the government c. they are guaranteed by the investment industry d. a stockholder's personal assets can be used to pay the bondholder's interest e. bondholders can elect the board of directors
Since countries differ in the amount of economic activity that is transacted in organized markets,
a. some countries are more productive than others. b. persons live better in some countries than others. c. international comparisons of per capita GDP are often misleading. d. comparisons between countries are totally impossible.
Refer to the graph below for a monopolist in short-run equilibrium. This monopolist:
A. Has a loss per unit equal to DE
B. Has total fixed costs equal to area BEFC
C. Earns positive economic profit equal to the area of ABED
D. Will cease production since its economic profits are negative