Econ 20l/4 Final Exam Dr. Jaques Fall 97 l. ans. I a. "A rise in the price of corn increases the supply of corn thereby stabilizing the market so that there are no long run effects from this initial price increase." Comment b. "A rise in the price ofcorn causes the demand for corn to fall and the market returns to its initial price and quantity combination in the long run." Comment II. ans. I a. Carefully demonstrate the process by which we can argue that the costs of agricultural support programs far exceed what one might expect, are ineffective in the redistribution they seek to accomplish, and may redistribute income in a manner justthe opposite ofthe intentofthe program b. "An excise tax placed on a competitive industry will alter price and the output decisions ofthe firms, but the same tax placed on a monopolist will change neither the price nor output." Comment. Be precise III. ans. I a. Compare and contrast the efficiency and welfare effects of: monopoly, perf. Competition., and monopolistic competition. Be precise.
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