Comment on the following statement: "Even though the supply of land is perfectly inelastic, the supply of land in a given use may not be fixed."
What will be an ideal response?
The statement is true. When the value of land in one use increases, individuals using land for other purposes may sell their land for the alternative use. For example, if housing developers become more willing to pay for land on which to build new subdivisions, farmers may be willing to give up farmland for the higher price. This increases the supply of land available for housing and lowers the supply of land available for farming.
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A chief reason firms give employees bonuses based on the firm's profit is to cope with
A) the tax laws. B) the law of diminishing returns. C) the principal-agent problem. D) unions.
A diagram that shows the maximum amount of one type of good that can be produced in an economy, given the production of the other is known as
A) an indifference curve. B) the tradeoff schedule. C) the production possibility frontier. D) the balance of trade.
A consumer values a car at $30,00 . and a producer values the same car at $20,000 . If the transaction is completed at $24,000 . the transaction will generate:
a. No surplus b. $4,00 . worth of seller surplus and unknown amount of buyer surplus c. $6,00 . worth of buyer surplus and $4,00 . of seller surplus d. $6,00 . worth of buyer surplus and unknown amount of seller surplus
In order to achieve a high economic freedom rating, a country must
A) provide citizens with housing, health care, and other basic goods free of charge. B) protect property rights, enforce contracts even-handedly, and rely extensively on markets to allocate goods and services. C) use the taxing power of the state to redistribute income from the rich to the poor and thereby promote income equality. D) elect political officials democratically.