Scientists have developed a bacterium they believe will lower the freezing point of agricultural products. This innovation could save farmers $1 billion a year in crops now lost to frost damage. If this technology becomes widely used, what will happen to the equilibrium price and quantity in, for example, the potato market?
A. price will increase, quantity will increase
B. price will decrease, quantity will decrease
C. price will increase, quantity will decrease
D. price will decrease, quantity will increase
E. The change in equilibrium price and quantity is indeterminate.
Answer: D
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A study of estimated multipliers in the major econometric models shows that
A) the government-spending multiplier tends to increase and then later decrease over time. B) the monetary multiplier is much larger than the government spending multiplier. C) there is quite a bit of variation in the value of the multipliers among the models. D) A and C are both correct.
According to your text, which of the following represents the largest source of tax receipts for the Federal government?
A) sales taxes B) individual income taxes C) corporate income taxes D) property taxes
If you're interested in measuring changes in people's standards of living, the most appropriate measure to use is the growth in the nation's
a. nominal GDP b. real GDP c. capital-output ratio d. capital stock e. employment
If the government wants a natural monopolist to achieve allocative efficiency, the government should
A. Subsidize the firm and require marginal cost pricing. B. Use price ceilings so the firm will earn a normal profit. C. Ensure that the firm produces at full capacity. D. Regulate the firm so that it produces the output level at which economic profit is zero.