The morel is a prized mushroom that is often abundant in the Western United States in years after forest fires. Suppose two companies are buying morels from workers willing to find them. One company offers to pay workers $5.00 per pound, and the other company will pay workers only $4.00 per pound. Economists would say that:
A. the higher-paying company will attract the more creative and innovative pickers and the lower-paying company will attract the others.
B. the lower-paying company will attract the more creative and innovative pickers and the higher-paying company will attract the others.
C. the company willing to pay only $4.00 has a comparative advantage in selling morels.
D. this situation violates the law of one price and is not likely to persist.
Answer: D
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Refer to Supply and Demand. Deadweight loss
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a. is eliminated by a limited draft.
b. occurs only with a volunteer army.
c. occurs only with a draft.
d. Occurs with both a volunteer army and with a draft.
Economists refer to the talents, training, and education of workers as:
A. labor supply. B. physical capital. C. human capital. D. average labor productivity.
Adverse selection occurs in the used car market because:
A. the seller has more information than the buyer. B. the buyer has more information than the seller. C. both the buyer and the seller have incomplete information. D. Any of these could be the cause of adverse selection in the used car market.
The higher the death rates in less-developed countries, the smaller the average family size
a. True b. False Indicate whether the statement is true or false