Which of the following explains why talented major league baseball players command much higher salaries than neurosurgeons?
A) because it takes far more skill and training to be a major league baseball player than to be a neurosurgeon
B) because the supply of talented major league baseball players is low relative to its demand compared to the supply of neurosurgeons. Therefore, adding another player yields far greater marginal benefit than adding another neurosurgeon.
C) because the total value of baseball games is much higher than the total value of neurosurgery
D) because the supply of talented major league baseball players is relatively low compared to the supply of neurosurgeons. Therefore, major league baseball players exert far more market power than neurosurgeons.
B
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Refer to Figure 3-4. If the current market price is $15, the market will achieve equilibrium by
A) a price increase, increasing the quantity supplied and decreasing the quantity demanded. B) a price decrease, decreasing the supply and increasing the demand. C) a price decrease, decreasing the quantity supplied and increasing the quantity demanded. D) a price increase, increasing the supply and decreasing the demand.
Which of the following pairs of goods would be expected to have a positive cross-price elasticity of demand?
A) coffee and tea. B) gasoline and large SUVs. C) tennis racquets and tennis balls. D) hot dogs and hot dog buns.
Team production is a limiting factor as a solution to incentive problems because:
A. some team members never get along. B. some team members may perceive the team leader to be a role model. C. some team members may choose to shirk and let the rest carry the load. D. the entire team may be inefficient.
Worker migration will cause wage rates to equalize across two countries if all of the following conditions are met except:
A. migration is motivated strictly by wage differentials. B. neither nation restricts or interferes with migration. C. both countries use the same currency. D. migration has no cost.