Tom Searchinger, a senior attorney at the Environmental Defense Fund, observed that generous farm subsidies have encouraged farmers to produce more corn and more wheat. How does this affect the market for fertilizer?
A) The supply of fertilizer increases.
B) The supply of fertilizer decreases.
C) The demand for fertilizer increases.
D) The demand for fertilizer decreases.
Answer: C
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About six months ago, Pat lost the job as vice president of a local bank. Since losing the job, Pat still has the Sunday newspaper delivered every week. For Pat, the Sunday newspaper is
A) income inelastic. B) price inelastic. C) an inferior good. D) a normal good because Pat still buys the paper even with a big loss of income.
The ways to address agency costs include all EXCEPT
a. advertising for employee positions in as many outlets as possible b. requiring employees to punch time clocks c. spot checks of the quality of employee work d. replacing closed offices with cubical office spaces