According to the text, what economic principle justifies the high salaries of some Professional athletes?
What will be an ideal response?
Some professional athletes have a very high marginal revenue product. Profit-maximizing firms employ labor if and only if marginal revenue product is equal to or greater than market wages.
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Price elasticity of demand is measured using percentage changes. Why?
What will be an ideal response?
The distribution of surplus gained from private parties solving an externality problem on their own, as described by the Coase theorem, is dependent on:
A. who has more power to see to enforcement. B. which party has more negotiating power or wealth. C. where the initial rights of the parties lie. D. None of these statements is true.
For the monopolistically competitive firm, the steepness of the demand curve depends on:
A. the number of consumers in the market. B. the steepness of the MC curve. C. the availability of close substitutes. D. None of these statements is correct.
The federal debt is the
A. yearly federal tax revenues minus the yearly federal expenses. B. amount towed to the federal government by other countries. C. total amount owed to the public by the federal government. D. same as the federal deficit.