Suppose that a violent earthquake causes the uninhabited Hawaiian island of Mokuauia (also called Goat Island) to fall into the Pacific Ocean. No people are killed or injured, and since the island is undeveloped, no buildings are destroyed. The island was a source of tourist income for Hawaiian landowners. Which of the following statements correctly describes the rents earned by the people who
own land on the surrounding islands?
a. As the supply of vacation land decreases, the marginal productivity of the remaining land will decrease; thus rents will decrease.
b. As the supply of vacation land decreases, the marginal productivity of the remaining land will increase; thus, rents will decrease.
c. As the supply of vacation land decreases, the marginal productivity of the remaining land will increase; thus, rents will increase.
d. There would be no change in the rents earned by the other landowners because the effects of supply and demand would exactly cancel each other out.
c
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The elasticity of demand for employees is -0.50. It is also estimated that the existing minimum wage (price floor) has increased the raise the wage by 25% above equilibrium wage
How much would the employment change if the price floor was eliminated? A) Employment would decrease by 12.5%. B) Employment would increase by 12.5%. C) Employment would decrease by 25%. D) Employment would increase by 25%.
The marginal product curve rises when the marginal cost curve rises
a. True b. False Indicate whether the statement is true or false
Which of the following is not an example of a moral hazard problem?
a. A manager stays late one evening so that her employee can leave early to attend his child's music recital. b. A small child takes an extra cookie from the cookie jar when he thinks his mom isn't watching him closely. c. An employee plays solitaire on her computer at 4:30 p.m. on a Friday when her boss has left for the day. d. A customer whose new eyeglasses come with a "60-day insurance policy in case of breakage" leaves her glasses out where her new puppy can chew on them.
For any pair of nations and goods, if each country has a comparative advantage in the production of one product, it is reasonable to expect that specialization and trade will benefit both countries.
Answer the following statement true (T) or false (F)