Sometimes feedback effects can alter the intended outcomes of a policy,for example: In response to a policy that _______ the price of rice a farmer may see profits _______ however as more famers demand more labor profit will decrease as wages for unskilled labor __________.
A) Increases; increase; increases
B) Increases; decrease; decrease
C) Decreases; increase; increase
D) Decreases; decrease; decrease

Question

Quizplus · Accepted Answer

The policy that increases the price of rice would initially increase a farmer's profits. However, as more farmers demand more labor to capitalize on the higher prices, the increased demand for labor would drive up wages for unskilled labor, thus reducing profit margins over time.

Sometimes Feedback Effects Can Alter the Intended Outcomes of a Policy,for