The salary of an athlete like Peyton Manning is in part a reward for his unique ability—something economists call a compensating differential.
Answer the following statement true (T) or false (F)
False
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The aggregate demand curve shows the ________ relationship between the price level and ________
A) positive; the quantity of real GDP demanded B) negative; aggregate labor demanded C) positive; aggregate labor demand D) negative; the quantity of real GDP demanded
The rail system in Metropolis is a natural monopoly. If the government regulates the system by setting the fare equal to marginal cost, which of the following will be true?
a. The managers of the rail system will be allowed to adjust marginal cost so that they can get a normal rate of return on capital. b. The managers of the rail system will be allowed to adjust marginal cost so that they can get a fair profit. c. The rail system will earn economic profit at that fare. d. If the government doesn't give the rail system a subsidy to supplement revenue from fares, the system will face continuous economic losses. e. If the government doesn't give the rail system a subsidy to supplement revenue from fares, fare increases will push marginal cost upward.
A price floor above the equilibrium price causes excess quantity demand.
Answer the following statement true (T) or false (F)
When using equity financing, firms run the risk of ________.
A) losing a controlling interest to shareholders B) acquiring capital through the sale of shares C) incurring an unmanageable amount of debt D) falling victim to currency exchange rates