The supplier of a factor of production has a reservation price of $100. The purchaser of the factor of production has a reservation price of $200. If the factor of production is unique, then:
A. a transaction will occur, and the price paid for the factor of production will be $200.
B. a transaction will occur, and the price paid for the factor of production will be $100.
C. a transaction will occur, and the price paid for the factor of production will be $150.
D. there will be no transaction since $200 is greater than $100.
Answer: A
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Refer to the tables. Suppose that North Cantina is producing 2 units of capital goods and 17 units of consumer goods while South Cantina is producing 2 units of capital goods and 21 units of consumer goods. We can conclude that:
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B. South Cantina is fully and efficiently using its resources, but North Cantina is not.
C. neither South Cantina nor North Cantina is fully and efficiently using its resources.
D. both South Cantina and North Cantina are fully and efficiently using their resources.