Prices usually allocate resources efficiently because they allocate
A. consumption to the highest cost of good or service.
B. resources to the lowest value good or service.
C. consumption to the lowest value good or service.
D. resources to the highest value good or service.
Ans: D. resources to the highest value good or service.
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Suppose, in the United States, each farmer is given a federal agricultural subsidy worth $30,000 . What will be the effect of such subsidy?
a. They discourage domestic agricultural production. b. They allow U.S. farmers to sell their products for lower prices in foreign markets. c. They give foreign producers an unfair cost advantage. d. They increase the amount of agricultural imports into the United States. e. The price of the primary products decline in the U.S. market.
After the U.S. government had approved the feeding of hormones to U.S. beef cattle, several western European nations restricted the import of beef from the U.S. Which of the following tools of commercial policy had been put to use in this situation?
a. Tariff b. Quota c. Health and safety standards d. Subsidy e. Government procurement