Last Year a Pestilential Fungus Ravaged the Cocoa Fields

question 5

Multiple Choice

Last year a pestilential fungus ravaged the cocoa fields.The price of chocolate has risen abruptly to $1 per ounce.The government is considering emergency measures to aid suffering chocolate addicts.One plan being considered is the Chocolate Relief Plan (CRP) .This plan would set a price ceiling of $.80 per ounce on chocolate.This would cause a shortage, so the CRP will limit consumption to no more than 10 ounces of chocolate per person per week.At $.80 per ounce, enough chocolate would be produced for everyone to have 10 ounces.Jill buys less than 10 ounces per week at $1 per ounce but would buy more than 10 ounces if the price dropped to $.80.

• A)Jill is definitely better off without the CRP.
• B)Jill is better off without the CRP if $1 is the competitive equilibrium price without the CRP.
• C)Jill is better off with CRP only if the industry is monopolized and the price exceeds marginal cost in the absence of the CRP.
• D)Jill is definitely better off with the CRP.
• E)None of the above.

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Definitions:

Parasympathetic Nervous System

Part of the autonomic nervous system that conserves energy as it slows the heart rate, increases intestinal and gland activity, and relaxes sphincter muscles.

Insulin

A hormone produced by the pancreas that regulates blood sugar levels by facilitating the uptake of glucose into tissues.

Pancreas

A glandular organ located in the abdomen that plays a crucial role in digestion and insulin production.

Endocrine Glands

Glands in the body that release hormones directly into the bloodstream to regulate various bodily functions.