Governments often intervene in agricultural markets by
A) granting subsidies.
B) setting production quotas that will increase production.
C) setting price floors that reduce prices for buyers.
D) imposing heavy taxes on farm products.
A
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In the above figure of a monopolistically competitive firm, the area of economic profit is
A) ADB. B) ABC. C) P2AD P4. D) P2FEP5.
The problem of production in multi-plant firms with asymmetric information can be solved by paying the manager
A) a piece rate, some constant amount per unit of output produced. B) a larger amount for each unit than was paid for the previous unit, to reflect increasing marginal cost. C) a smaller amount for each unit than was paid for the previous unit, to reflect decreasing marginal revenue. D) an annual bonus that increases with each unit of output up to capacity, and decreases with each unit of output past capacity. E) an annual bonus that is calculated decreases with each unit of output up to capacity, and increases with each unit of output past capacity.