Author Question: One of the best defenses we have against malaria these days comes from a fern-like weed called ... (Read 14 times)

mcmcdaniel · **on:** Jun 29, 2018

One of the best defenses we have against malaria these days comes from a fern-like weed called wormwood. Fluctuating supply and demand have pushed the plant's price from 155 per kilo one year, to over 1000 the next.

There is a push to set a price ceiling for the plant. Which of the following would NOT occur if there was a price ceiling set below the equilibrium price on wormwood? A) The wormwood market would be allocatively efficient because its price would not fluctuate.
B) A wormwood shortage might occur.
C) A black market for wormwood may be created.
D) There would be an increase in inefficiency in the wormwood market.

Question 2

In the long run, a monopolistically competitive firm's price equals

A) its average total cost and its marginal cost.
B) its average total cost but not its marginal cost.
C) its marginal cost but not its average total cost.
D) neither marginal cost nor its average total cost.