Superstars in sports or entertainment presumably would be willing to continue working in their specific areas for lower income than they are currently earning. This implies that
A. the large salaries serve no allocative function and only serve to make the superstars richer.
B. the high salaries are used to allocate their time but fail to bring in new sources of supply (other superstars) that are exactly like themselves.
C. superstars do not respond to monetary incentives.
D. superstars are exploiting their fans by receiving such a large salary.
Answer: B
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Which of the following combinations is plausible for a nation's balance of payments? (All numbers in billions.)
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A. an upward sloping supply of labor at all quantities of labor. B. a horizontal supply of labor at the minimum wage and the downward sloping portion of the labor demand curve below minimum wage. C. a horizontal supply of labor at the minimum wage and the upward sloping portion of the labor supply curve above minimum wage. D. a downward sloping supply of labor at all quantities of labor.
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