Ward Planter exclusively grew soybeans in each of the past three years and currently participates in the marketing loan program of the Food, Conservation, and Energy Act of 2008. If the "crop price" of soybeans at harvest is less than the pre-harvest
"loan price," Planter can:
A. sell his crop in the market and receive the difference between the crop price and loan price
as a direct payment from the federal government.
B. take a "crop credit" based on the difference between the crop price and the loan price and
use the credit to reduce federal income taxes owed.
C. receive an "emergency loan" that can be paid back over the following five years.
D. forfeit the harvest to the lender and be free of the loan, thus receiving a subsidy because
the proceeds from the loan exceed the revenues from the sale of the crop in the market.
Answer: D
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Absolute advantage is
A) the ability to produce a good or service at a higher opportunity cost than one's competitors. B) the ability to produce more of a good or service than competitors that have fewer resources. C) the ability to produce more of a good or service than competitors when using the same amount of resources. D) the ability to produce higher quality goods compared to one's competitors.
When a bank borrows from the Federal Reserve the bank
A) receives a new deposit of legal reserves at the Federal Reserve. B) creates a new checkable deposit payable to the Federal Reserve. C) normally will do so because it has excess reserves. D) loses reserves equal to the amount of the loan.
Define horizontal and vertical equity and discuss the concepts with respect to legitimacy and usefulness
What will be an ideal response?
Contingency fees
a. are illegal in many countries. b. are calculated as a percentage of the total damage award. c. are similar to punitive damages. d. according to some reformers, should be increased to discourage further lawsuits. b. both a and b.