1. State and explain the Law of Diminishing Returns. Provide an example of the Law of Diminishing Returns. What can businesses learn from this law?
2. Some countries use price floors for their domestic farmers to guarantee them a high return on theirproduction. Suppose there is a price floor on wool that is binding. What will be the effect on the wool market? Identify who benefits from this policy and who bears the cost.
3. Describe how government is involved in creating a monopoly. Why might the government make a monopoly? State at least 2 reasons. Give an example of a government created monopoly.