A guarded barbed wire fence separates East and West Bovinia. Soccer players are paid twice as much in West Bovinia as in East Bovinia. This is an example of
a. inelastic supply
b. a temporary resource price differential
c. a permanent resource price differential
d. diminishing marginal revenue product
e. economic rent
C
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Sandra wants to purchase a Nitro scooter from the only Nitro dealer in town, but the dealer will not sell her the scooter unless she also purchases an extended warranty for $1,000
Sandra does not want to purchase the extended warranty from the dealer because she knows she can purchase the exact same warranty from her insurance company for $500. In this instance, the Nitro dealer appears to be violating one of the provisions of A) the Sherman Act. B) the Clayton Act. C) the Federal Trade Commission Act. D) the Robinson-Patman Act.
If a competitive firm's short run average cost curve lies above the price of the product, we can conclude that the firm
a. is earning a huge profit. b. is incurring losses. c. is earning zero economic profits. d. is earning a normal profit.
Firms in a perfectly contestable market will be forced to operate as efficiently as possible and to charge prices as low as long-run financial survival permits. Why?
What will be an ideal response?
Which of the following helps to explain why the inflation fallacy is a fallacy?
a. Increases in the price level can be created by increases in money demand. b. Nominal incomes tend to rise at the same time that the price level is rising. c. As the price level rises, the value of a dollar falls. d. Inflation only changes nominal variables.