Why is the price of a scarce exhaustible resource in a competitive market above the marginal cost of providing a unit of the resource?
What will be an ideal response?
Because the resource is scarce, the owner receives a rent. The addition of the rent increases the price above the marginal cost of providing the resource.
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The wage elasticity of labor demand is always negative.
Answer the following statement true (T) or false (F)
If country A is importing good x from country B where x is produced in a perfectly competitive industry (composed of identical firms), then, in the long run, country A will suffer the entire deadweight loss from any tariff it might impose on imports of x from country B.
Answer the following statement true (T) or false (F)
Refer to Figure 2-4. Consider the following events:
a. an increase in the patent protection period to 75 years b. a hurricane that destroys a substantial portion of a nation's capital stock c. the implementation of a secure and enforceable property rights system Which of the events listed above could cause a movement from W to Z? A) a, b, and c B) a only C) a and c only D) a and b only E) b and c only
Assume that business investment spending rises, and the increase is funded by greater borrowing in the capital markets. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the current international transactions balance and monetary base in the context of the Three-Sector-Model? a. The current international transactions balance rises and
monetary base rises. b. The current international transactions balance falls and monetary base falls. c. The current international transactions balance falls and monetary base rises. d. The current international transactions balance and monetary base remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.