Refer to the below graph of the market for wheat. The government adopts a price support program for wheat, and supports the wheat price at P2. The area of 0P2AQ1 would measure the:
A. Total amount received by wheat farmers
B. Total profits of wheat farmers
C. Amount the government will pay to wheat farmers
D. Amount private buyers of wheat will pay to wheat farmers
D. Amount private buyers of wheat will pay to wheat farmers
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In theory the market's willingness-to-pay (WTP) should be equal to the market's willingness-to-accept (WTA). In other words, if you are willing-to-pay $1 for an incremental improvement in tap water quality, then you should be willing-to-accept $1 for an incremental decrease in tap water quality. In practice, however, the two are often estimated to be unequal. Which of the following helps to explain this disparity?
a. the WTA/WTP disparity b. the endowment effect c. benefit transfer d. value of statistical life e. cost-benefit analysis f. expected value g. risk and uncertainty h. None of the above.
The typical cost curves are U-shaped due to the
A) law of diminishing marginal utility. B) law of supply. C) law of demand. D) law of diminishing marginal product.