When two goods are perfect substitutes, averages are better than extremes, resulting a diminishing marginal rate of substitution.
Answer the following statement true (T) or false (F)
False
Rationale: When two goods are perfect substitutes, averages are valued the same as extremes, resulting in a constant indifference curve, giving us constant rather than diminishing marginal rates of substitution.
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Government intervention in agricultural markets was
a. ruled unconstitutional by the Supreme Court in 1936 b. initially introduced to promote agricultural exports and to curb agricultural imports from other countries, especially from Spain c. initially designed to help consumers by legislating farm prices below their equilibrium levels d. started in 1933 e. initially designed to promote productivity and to decrease the number of farms in the economy
Suppose an excise tax is imposed on two products X and Y, both of which have identical supply elasticities. The demand for good X is highly elastic, while the demand for good Y is highly inelastic. The deadweight loss (or excess burden) will be
a. equal in both cases. b. larger for good X than good Y. c. larger for good Y than good X. d. zero in both cases.