Why is it more expensive to acquire a new house in an urban area than in a rural area if the costs of labor and building materials are the same?
A quick glance to the demand side might reveal a consumer preference for urban living, for a variety of reasons we need not go into here. On the supply side, we would find the price of land is much higher in urban areas due to opportunity cost considerations associated with land use. The higher priced land is a necessary input for constructing a house, thus implying a higher price for the final product it helps produce.
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An increase in the wage rate will have a greater effect on average costs
a. the larger the proportion labor costs are of total costs and the easier it is to substitute capital for labor. b. the larger the proportion labor costs are of total costs and the harder it is to substitute capital for labor. c. the greater is the diminishing marginal product of labor. d. the greater are returns to scale.
The accompanying graph shows the cost curves for Moe's mushroom gathering business, which is perfectly competitive.
Moe's short run supply curve is:
A. curve A above curve C. B. curve C to the right of curve A. C. curve B to the right of curve A. D. curve A above curve B.
When the receipts given by goldsmiths to depositors were used to make purchases,
A. the gold standard was created. B. existing banking laws were violated. C. the receipts became in effect paper money. D. a fractional reserve banking system was created.
Which of the following is an endogenous variable in our model of the goods market in Chapter 3?
A) consumption (C) B) disposable income (YD) C) saving (S) D) total income (Y) E) all of the above