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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A substantial decrease in the aggregate price level that reduces firms' net worth may stall a recovery from a recession. This process is called
A) debt deflation. B) moral hazard. C) insolvency. D) illiquidity.
If the managers of Happy Avocados, a ready-made guacamole firm, spend considerable time researching different prices and quality measures offered by multiple avocado farmers, the time spent is considered to be a(n) ________ cost.
A) information B) negotiation C) monitoring D) enforcement
What best describes Thomas Jefferson's view of how American Indians should be treated?
a. Tribes should be forced to leave their native lands in the east and move west. b. Indians should have full property rights that should be respected by whites. c. Indians could continue to live on their reservations but the federal government should have access to all mining and natural resources on their land.
Assume soybeans are produced in a perfectly competitive industry. A soybean farmer is currently maximizing his profits. If the market price of soybeans falls, after the farmer adjusts to the new price, he will be producing __________ bushels of soybeans and his profit will be __________.
A) fewer; the same B) fewer; lower C) more; the same D) the same number of; the same