Identify the Truthfulness of the Following Statements

question 39

Multiple Choice

Identify the truthfulness of the following statements.
I. Government purchase programs in agriculture tend not to be more expensive than acreage limitation programs.
II. Government purchase programs in agriculture tend to be politically more palatable than direct cash transfers, even though they induce more deadweight loss.

• A) Both I and II are true.
• B) Both I and II are false.
• C) I is true; II is false.
• D) I is false; II is true.

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Definitions:

Long Run

A period in economics where all factors of production and costs are variable, and firms can adjust all inputs according to market demands.

Arc Elasticity

A method for calculating elasticity between two points on a demand curve using the midpoint formula.

Wheat Demand

The total quantity of wheat that consumers are willing and able to purchase at a given price level.

Price Elasticity of Demand

A measure of the responsiveness of the quantity demanded of a good to a change in its price.