A firm that both hires labor and sells its product in purely competitive markets will
A. have a horizontal supply curve for its product.
B. face a downward-sloping demand curve for its product.
C. have a horizontal demand curve for labor.
D. have a downward-sloping demand curve for labor.
Answer: D
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Isabel can work as a rodeo clown, where the probability of being killed in a work-related accident is 5/10,000, or she can earn work as a sword swallower, where the probability of being killed in a work-related accident is 3/10,000
Using the compensating differential approach, the value of Isabel's life is $5 million. How much more per year will working as a rodeo clown pay than working as a sword swallower?
Which of these economic variables is procyclical?
A) consumer spending B) stock prices C) the government bond spread D) all of the above E) none of the above
When prices drop in response to a decline in demand for an increasing cost industry:
a. producer surplus will increase but rents may decrease. b. rent earned by elastically supplied inputs will decline by more than rent earned by inelastically supplied inputs. c. rent earned by elastically supplied inputs will decline by less than rent earned by inelastically supplied inputs. d. both producer surplus and rents will increase.
The social cost of production, in cases where negative externalities exist, is equal to the
a. sum of private and external costs minus social benefit b. sum of private and external costs c. sum of private cost and external cost minus social benefit d. sum of private cost and external cost e. current market price plus the external cost