Question :
11) Agricultural price supports in the United States
A) harm : 1226536
11) Agricultural price supports in the United States
A) harm U.S. consumers, U.S. taxpayers, and foreign farmers and creates a deadweight loss.
B) benefit U.S. taxpayers, U.S. farmers, and U.S. consumers.
C) create gains to U.S. farmers that are at least as large as losses to U.S. consumers.
D) decrease the deadweight loss and improve market efficiency.
E) None of the above answers is correct.
12) A price support set above the equilibrium price does which of the following?
i.decreases producer surplus
ii.decreases consumer surplus
iii.decreases the marginal cost of the last unit produced
A) i and ii
B) i and iii
C) ii and iii
D) i, ii, and iii
E) ii only
13) Suppose the equilibrium price of cotton is $100 per ton. A price support set at ________ than $100 per ton ________.
A) less; increases producer surplus
B) less; increases consumer surplus
C) more; increases consumer surplus
D) more; decreases marginal cost
E) more; creates a surplus that the government must buy
14) In the market for cotton, suppose the equilibrium price is $10 per ton and the equilibrium quantity is 100 tons. If the government then imposes a price support of $20 per ton,
A) marginal benefit exceeds marginal cost.
B) the market becomes more efficient
C) marginal cost decreases.
D) the government must supply some cotton to offset the shortage that results.
E) marginal cost exceeds marginal benefit.
15) In the market for cotton, suppose the equilibrium price is $10 per ton and the equilibrium quantity is 100 tons. If the government then imposes a price support of $5 per ton,
A) a deadweight loss is created.
B) the market becomes more efficient.
C) consumer surplus increases.
D) producers’ economic profits increase.
E) None of the above answers is correct.
16) The above figure shows the domestic market for wheat. Suppose this market is isolated from global competition. The with no government intervention, the equilibrium price is ________ and the equilibrium quantity is ________.
A) $15 per ton; 100 million tons
B) $14 per ton; 250 million tons
C) $12 per ton; 300 million tons
D) $12 per ton; 250 million tons
E) $15 per ton; 400 million tons
17) The above figure shows the domestic market for wheat. Suppose this market is isolated from global competition and the government intervenes by setting a support price of $15 a ton. The quantity produced once the price support is in place is
A) 400 million tons.
B) 300 million tons.
C) 100 million tons.
D) 250 million tons.
E) 200 million tons.
18) The above figure shows the domestic market for wheat. Suppose this market is isolated from global competition and the government intervenes by setting a support price of $15 a ton. The quantity bought by domestic users once the price support is in place is
A) 300 million tons.
B) 400 million tons.
C) 250 million tons.
D) 200 million tons.
E) 100 million tons.
19) The above figure shows the domestic market for wheat. Suppose this market is isolated from global competition and the government intervenes by setting a support price of $15 a ton. To keep the price at this level, the government will ________ million tons of wheat.
A) purchase 300
B) sell 400
C) purchase 100
D) purchase 250
E) sell 300
20) The above figure shows the domestic market for wheat. Suppose this market is isolated from global competition and the government intervenes by setting a support price of $15 a ton. As a result of this price support, the total subsidy paid to wheat farmers equals
A) $4 billion.
B) $3 billion.
C) $3.5 billion.
D) $1.5 billion.
E) $4.5 billion
