Explain the effects of communal farming on the incentive for individual farmers to expand their farms, relative to the incentives that exist in a market system
What will be an ideal response?
With the market system, effort and reward are directly linked, so a farmer who expends the effort to produce more crops gets to eat or sell the entire production quantity. With communal agriculture, the farmer who expends enough effort to grow additional crops must share those crops with the other farmers. Communal agriculture shrinks the reward to hard work, so society naturally ends up with less hard work, and as a result, fewer crops.
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In the above figure, the demand for loanable funds curve is drawn for the average expected profit. If the real interest rate is constant at 6 percent and the expected profit rises, the amount of loanable funds demanded will be
A) less than $450 billion. B) $450 billion. C) between $300 billion and $450 billion. D) greater than $450 billion.
The type of tax receipts that has shown the slowest growth since World War II has been
A) personal taxes. B) contributions for social insurance. C) taxes on production and imports. D) corporate taxes.
If Marginal cost is lower than Average Cost (AC), average cost is
a. falling b. rising c. constant d. none of the above
General Motors benefits from tariffs on imported automobiles. Companies that use many automobiles, such as rental agencies, want to get them cheaply. In this case, the issue of tariff legislation involves
a. a simple majority because it promises concentrated costs and benefits b. competing interests because it promises concentrated costs and benefits c. a simple majority because it promises concentrated benefits and widespread costs d. competing interests because it promises concentrated benefits and widespread costs e. competing interests because it promises concentrated costs and widespread benefits