The U.S. government imposes import quotas on many agricultural products, especially products that receive price supports. Offer an economic explanation for this
What will be an ideal response?
If the price supports generate a price in the United States for a product that is above the price in other countries, producers in other countries would increase production with the intention of selling the units in the United States. But, with price supports, the government must purchase all extra units to maintain the price. With imports from abroad, this would get very expensive. Hence, imports are limited through quotas.
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Tom is buying a quantity of wheat at which the marginal utility (in dollars) exceeds price. He should
a. reduce wheat consumption, thus raising P to the level at which MU = P. b. reduce wheat consumption, thus raising MU to the level at which MU = P. c. increase wheat consumption, thus raising P to the level at which MU = P. d. increase wheat consumption, thus lowering MU to the level at which MU = P.
Suppose that a consumer purchases just two goods, X and Y. The ratio of the price of good X to the price of good Y is the:
A. Intercept on the Y axis of the budget line B. Intercept on the X axis of the budget line C. Size of the shift in the budget line D. Slope of the budget line