Most former communist governments of Eastern Europe subsidized food production ( both in absolute terms and rela-tive to any subsidies provided other goods). Explain the effect of this policy on the relationship between the typical Eastern European consumer’s marginal rate of substitution between food and all other goods ( treated as a composite good) and the marginal rate of transformation between food and all other goods.
Answer to relevant QuestionsBy any absolute or relative measure, mail order and online shopping has increased dramatically over the past few decaders. Explain why this might be the case on account of the growth of two- wage- earner families. What does the contract curve in an Edgeworth production box signify? Why do competitive markets generate equilibriums that lie on the contract curve?Under marketing orders instituted during the 1930s and administered by the U. S. Department of Agriculture, orange growers in California and Arizona have been successful in behaving as a cartel in the fresh orange market. ...Why will private markets produce an inefficient output of a public good? Explain how the efficient level of a public good is determined.Suppose that in the preceding problem drug producers invent another production process that discharges no waste and can be used at a constant cost of 10.6 cents per dose. a. What will the price and output of the miracle drug ...
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