The three principal agricultural policies which have addressed the farm problems in the past are price supports, supply restrictions and target prices. Briefly describe the principal provisions of the Federal Agriculture Improvement and Reform Act of 1996. Draw a graph for each. Now explain the logic of how the above two concepts are used by a firm to determine how many units of a factor of production to buy. Use a graph to supplement your answer.
Wage rates are the result of labor demand and supply in labor markets.
Differences in wage rates must be the result of differences in demand and supply in different markets. The demand for labor depends on labor's marginal revenue product, which in turn depends on the marginal revenue and marginal physical product of labor. On the exam, you may be asked to show the effect of some other factor. Use a graph which shows and explains The Triangle to supplement your answer. Explain one non-governmental way to internalize externalities.