How does a production quota influence farm prices and output?
What will be an ideal response?
If a production quota is set above the equilibrium quantity, it has no effect. If a production quota is set less than the equilibrium quantity, it decreases output and raises the price.
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Suppose that your roommate is very untidy. Suppose she/he gets a $100 benefit from being messy but imposes a $200 cost on you. (Assume that there are no regulations against untidiness in your living quarters.) The Coase Theorem would suggest that an efficient solution can be reached where: a. you pay your roommate at least $100 but no more than $200 to clean up after her/himself b. you pay your
roommate at least $201 to clean up after her/himself. c. you continue to live with your untidy roommate until you are able to make other living arrangements elsewhere. d. your roommate pays you at least $100 to have you clean up after her/him.
A disadvantage of the barter system is that
A) no trade occurs. B) people must produce all their own food, clothing, and shelter. C) the opportunity to specialize is greatly reduced. D) gold is the only unit of account.
Based on your findings, show that the new lead standard passed the feasibility test for this three-year period.
REGULATORY IMPACT ANALYSIS (RIA) FOR LEAD IN DRINKING WATER In June 1991, the EPA announced a maximum contaminant level goal (MCLG) of zero for lead and a more stringent maximum contaminant level (MCL) of 0.015 mg/l. This new primary standard lowered the allowable lead level in drinking water from its former limit of 50 parts per billion (ppb) to 15 ppb. Because these regulations were expected to have a substantial financial impact on the regulated community — in excess of $100 million per year, they were subject to Executive Order 12291 and had to be accompanied by a Regulatory Impact Analysis (RIA). A summary of the estimated benefits and costs (stated as annualized values) from this RIA, is given below. BENEFITS Health (based on avoided medical costs) From corrosion control and source water treatment: $2.8 – $4.3 billion per year From replacement of lead service lines $70 – $240 million per year Material Accruing to households and water systems $500 million per year Incremental Benefits $3.4 – $5.0 billion per year COSTS Treatment, implementation, education costs Treatment costs: $390 – $680 million Monitoring costs: $ 40 million Education costs: $ 30 million State implementation costs: $ 40 million Incremental Costs $500 – $790 million per year NET BENEFITS Net Benefits: $2.9 – $4.2 billion per year
When the consumer price index rises, the typical family
a. has to spend more dollars to maintain the same standard of living. b. can spend fewer dollars to maintain the same standard of living. c. finds that its standard of living is not affected. d. can offset the effects of rising prices by saving more.