Suppose that the demand for apples in Washington is elastic and the supply is inelastic. If the government of Washington passes a law prohibiting the use of synthetic pesticides that increases the marginal and average costs of producing apples, then:
a. the price of Washington State apples will decline.
b. Washington will stop producing apples, and New York apple growers will benefit.
c. apple growers will pass most of the increased costs on to consumers in the form of higher apple prices.
d. apple growers will keep prices constant but reduce costs by advertising less.
e. apple growers will bear most of the increased costs of regulation, and prices will increase only slightly.
e
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The optimum tariff is
A) the best tariff a country can obtain via a WTO negotiated round of compromises. B) the tariff, which maximizes the terms of trade gains. C) the tariff, which maximizes the difference between terms of trade gains and terms of trade loses. D) not practical for a small country due to the likelihood of retaliation. E) not practical for a large country due to the likelihood of retaliation.
Two isoquants, which represent different output levels but are derived from the same production function, cannot cross because
A) isoquants represent different utility levels B) this would violate a technical efficiency condition C) isoquants are downward sloping D) additional inputs will not be used by profit maximizing firms if those inputs decrease output E) Both B and D are true.