Question

Part I: Determine whether each of the following statements is TRUE or FALSE, and write a short explanation for your answer (You are required to write a short explanation of your answer to earn the full grade for the question!)

Answer 1

a. False. Higher level of competition in the market structure leads to fall in the social surplus in the economy because it leads to fall in the price level in the economy and also increase in the quantity produced at a lower cost. Thus, it reduces deadweight loss which can be seen in case of perfect competition where there is zero deadweight loss in the society while as the imperfection in the market increases, fall in the total surplus also increases.

b. True. Fluctuation in the level of income, inflation rate and unemployment rates in the economy impacts the marketers everywhere in the economy. Thus, it needs to be taken into consideration by marketers of food as well as agricultural products.

c. True. Every Giffen good is an inferior good but all inferior goods are not giffen goods,.

d. True. The fair packaging and product labeling act, 1967 was introduced to require all consumer products disclose information about identity and net content of the product.