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ECON 101 2Midtermreview

A firms opportunity cost of production is the sum of

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Unformatted text preview: benefit exceeds marginal social cost and the tax is inefficient. Ø། The tax revenue takes part of the total surplus. Ø། The decreased quantity creates a deadweight loss. Production Subsidies and Quotas (diagrams below were discussed in class) Intervention in markets for farm products takes two main forms: Production quotas Subsidies A production quota is an upper limit to the quantity of a good that may be produced during a specified period. A subsidy is a payment made by the government to a producer. Effects of a Quota: Effects of a subsidy Chapter 7: Global Markets in Action • • • Imports are the good and services that we buy from people in other countries. Exports are the goods and services we sell to people in other countries. What Drives International...
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