Although the long-run equilibrium price of oil is $80 per barrel, some producers have much lower costs because their oil reserves are relatively close to the surface and are easier to extract
If the low-cost producers have a minimum LAC equal to $20 per barrel, then the difference ($60 per barrel) is: A) an above-normal economic profit.
B) an economic rent due to the scarcity of low-cost oil reserves.
C) a profit that will go to zero as new oil producers enter the market.
D) none of the above
B
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Economists divide productive resources into which of the following four broad categories?
a. land, labor, money, enterprise. b. land, labor, capital, enterprise. c. minerals, unskilled labor, semi-skilled labor, skilled labor. d. land, buildings, machinery, money.
How does the two-good, two-country version of the Ricardian model differ from the two-country, many-good model in terms of the determination which goods are produced and exported by each country?
What will be an ideal response?
In the past there have been violent protests against the World Bank and the World Trade Organization. The protesters argued that these institutions promote free trade and also encourage corporations in rich countries to invest in poor countries. The protesters contended that these practices make rich countries richer and poor countries poorer. An economist would
a. disagree with the protesters because these practices will help make both rich and poor countries richer. b. disagree with the protesters about free trade, but would agree with the protesters about corporate investment. c. disagree with the protesters about corporate investment, but would agree with the protesters about free trade. d. agree with the protesters.
Which of the following statements is FALSE about the demand curve?
A. A change in demand is graphically shown by shifting the entire demand curve. B. An increase in demand shifts the demand curve to the left, closer to the price axis. C. When only the price of a good changes, there is movement along the demand curve but no change in demand. D. When demand decreases, there is a drop in the quantity demanded at each price.