Suppose a Farmer Plants Some Crops but a Pest Attacks

question 33

Multiple Choice

Suppose a farmer plants some crops but a pest attacks the crops and the farmer suffers economically. The pest has been a problem in recent years and farmers in the area have been applying a pesticide to control this particular pest. The next planting season he uses a stronger pesticide. There is a river near the farms and the river has tested positive for the presence of this pesticide. It is also known to kill beneficial soil organisms. Farmers are required to monitor the water and provide financial help to clean the river. The stronger pesticide is very costly. Scientists have warned that overuse of the pesticide will lead to the need of an even stronger pesticide. Which of the following should be the main evolutionary concern in this situation?

• A) How large the crop yield will be
• B) The environmental and financial costs associated with the use of the pesticide
• C) If the crop pest will become resistant to the pesticide and continue to damage the crop
• D) How many jobs will be created due to use of this pesticide
• E) If the pesticide will kill the pest; economics outweigh concerns about the water or human health

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Definitions:

Nominal Interest Rate

The rate of interest before adjustments for inflation; the stated rate on a loan or investment.

Real Interest Rate

The Real Interest Rate is the nominal interest rate adjusted for inflation, reflecting the true cost of borrowing or the true return on savings.

Economic Efficiency

Refers to the optimal production and distribution of resources to maximize social welfare and minimize waste.

Real Wage

The purchasing power of wages, adjusted for inflation, indicating the quantity of goods and services that can be bought.