A recent flood in the Midwest has destroyed much of the farmland that lies in fertile regions near the rivers. Describe the effect of the flood on the marginal productivity of land, labor, and capital. How would the flood affect the price of inputs? Provide some examples
The flood would increase the marginal product of unflooded land, lower the marginal product of labor, and lower the marginal product of capital. As such, the price of unflooded land should rise, and the prices of both labor and capital should fall.
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One difference between perfect competition and monopolistic competition is that
a. in perfect competition, firms cannot earn a long-run economic profit b. in perfect competition, firms take full advantage of economies of scale in long-run equilibrium; in monopolistic competition, firms do not c. only under perfect competition is there ease of entry and exit d. in monopolistic competition, the firm's demand curve is horizontal; in perfect competition, the firm's demand curve slopes downward e. in perfect competition, there are many firms; under monopolistic competition, there are few firms
The distribution of world income is
a. equalizing rapidly. b. very unequal. c. very equal for countries in the Northern Hemisphere. d. very equal for countries in Europe.
Which of the following statements about nominal interest and real interest is true?
A. Nominal interest is a yearly rate and real interest is a monthly rate. B. Nominal interest does not adjust for inflation, whereas real interest does. C. Nominal interest is what the lender receives and real interest is what the borrower pays. D. Nominal interest and real interest are two ways of saying the same thing.
Two products are perfect substitutes if:
A. a consumer is willing to swap one for another at a fixed rate. B. they are valuable only when used together in fixed proportions. C. their indifference curves are L-shaped. D. an increase in the price of one good causes a decrease in the demand for the other good.