With an Acreage Limitation Program (Compared with the Initial Situation

question 14

Multiple Choice

With an acreage limitation program (compared with the initial situation of no program) , which of the following statements is true?

• A)The impact on the government's budget is zero, consumer surplus increases and producer surplus decreases.
• B)The impact on the government's budget is positive, consumer surplus decreases and producer surplus increases.
• C)The impact on the government's budget is negative, consumer surplus increases and producer surplus decreases.
• D)The impact on the government's budget is negative, consumer surplus decreases, producer surplus increases, and there is a deadweight loss.

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Definitions:

Systematic Basis

A methodological approach of allocating costs or revenues over a specified period of time in a consistent and logical manner.

Voting Stock

Securities that give the shareholder the right to vote on company matters, such as electing the board of directors and approving corporate policies.

Contingent Payment

A payment that depends on achieving certain conditions or outcomes in the future.

Market Value

The current quoted price at which an asset or a company can be bought or sold on the open market.