Government intervention in agriculture usually involves
A. price supports in order to keep farm incomes high.
B. price ceilings in order to keep food prices low.
C. price ceilings in order to subsidize U.S. exports.
D. price supports in order to keep agricultural imports low.
Answer: A
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Advocates of flexible exchange rates claim that under flexible exchange rates, the central bank of
A) an overheated economy could cool down activity by increasing the money supply without worrying that undesired reserve inflow would undermine its stabilization effort. B) a cooled economy could cool down activity by contracting the money supply without worrying that undesired reserve inflow would undermine its stabilization effort. C) an overheated economy could cool down activity by contracting the money supply without worrying that undesired reserve inflow would undermine its stabilization effort. D) an overheated economy could cool down activity by contracting the money supply without worrying that undesired reserve outflow would undermine its stabilization effort. E) an overheated economy could cool down activity by decreasing employment and increasing output without worrying that this would undermine its stabilization effort.
Which statement best illustrates the law of diminishing returns?
A. The average total cost of the last unit of output produced is less than the average total cost of the preceding unit of output B. The marginal product of the last unit of a resource used is less than the marginal product of the preceding unit of resource C. The average product of the last unit of a resource used is less than the average product of the preceding unit of resource D. The marginal cost of the last unit of output produced is less than the marginal cost of the preceding unit of output
When Pam from Pennsylvania buys stock in Ford Motor Co., she is contributing to:
A. domestic portfolio investment in the U.S. B. capital outflow for the U.S. C. capital inflow for the U.S. D. foreign direct investment for the U.S.
Suppose labor productivity differences are the only determinants of comparative advantage, and Brazil and Chile both produce only coffee and sugar. In Chile, either 5 units of coffee or 2 units of sugar can be produced in one day. In Brazil, a day of labor produces either 2 units of coffee or 1 unit of sugar. Calculate the opportunity cost of producing sugar in Brazil
a. Half a pound of coffee b. 4 pounds of coffee c. 1 pound of coffee d. 2 pounds of coffee e. One and a half pounds of coffee