In the absence of government price supports, why is the production of wheat a good example of perfect competition?
What will be an ideal response?
ANS:
There are hundreds of thousands of producers. Total output exceeds 2 billion bushels, and no individual producer has a significant effect on the total supply. In the absence of government price supports, price would be determined by aggregate supply and demand. Moreover, wheat is close to being an identical product, and there is free entry into and exit from the business, widespread knowledge and information about production, and free mobility of the productive resources.
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The choice between futures and options
A) depends on whether the underlying instrument is a debt instrument or an equity. B) reflects a trade-off between the higher cost of using options and the extra insurance benefits that options provide. C) reflects a trade-off between the higher cost of using futures and the extra insurance benefits that futures provide. D) reflects a trade-off between the greater risk from using options and the extra insurance benefits that options provide.
Refer to the above table. The capital account balance is
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If the government wishes to maximize its tax revenue, it should
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