How is marginal revenue product reflected in “winner-take-all” markets such as in the music industry?
What will be an ideal response?
In the music industry, there is stiff competition to become a superstar. The superstars attract a large following who are willing to pay high prices for concert tickets and purchase many of the CDs produced by the artists. As a consequence, the artists’ work generates a great deal of revenue for the company. These superstars also have high earnings that reflect their high marginal revenue product.
You might also like to view...
Suppose there is an oil supply shock to the U.S. economy due to an embargo by major oil producing nations. According to the real business cycle theory, the supply shock will, other things being equal
A) cause economy-wide deflation. B) cause real Gross Domestic Product (GDP) to decline both in the short run and in the long run. C) push the economy into an expansionary phase of the business cycle. D) push real Gross Domestic Product (GDP) upward in the short run but downward in the long run.
Consider the demand curves for soft drinks shown in the figure above. Suppose the economy is at point a. What of the following could result in a movement to point b?
A) an increase in the price of bottled water B) a decrease in the price of bottled water C) an increase in the opportunity cost of soft drinks D) a decrease in the relative price of a soft drink
Suppose your expenses for this term are as follows:
tuition: $5,000, room and board: $3,000, books and other educational supplies: $500. Further, during the term, you can only work part-time and earn $4,000 instead of your full-time salary of $10,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college? A) $5,500 B) $8,500 C) $11,500 D) $14,500
The conversion of a barter economy to one that uses money
A) increases efficiency by reducing the need to exchange goods and services. B) increases efficiency by reducing the need to specialize. C) increases efficiency by reducing transactions costs. D) does not increase economic efficiency.