Suppose the supply of farmland is infinitely inelastic and the demand for land is downward sloping but inelastic at the current equilibrium
If the supply curve shifts leftward (e.g., some farmland is permanently converted to other uses), what happens to the aggregate economic rents in this market?
A) Decrease
B) Increase
C) Remain the same
D) We do not have enough information to answer this question.
B
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If the net benefit of Project A is $20 and that of Project B is $15, switching from Project A to Project B:
A) reduces the net benefit by $5. B) increases the net benefit by $5. C) reduces the net benefit by $15. D) increases the net benefit by $15.
In managing its liabilities to deal with liquidity problems, banks trade off
A) credit risk against interest rate risk. B) adverse selection against moral hazard. C) the need for available funds to meet deposit outflows against the desire for greater profit. D) present tax liabilities against future tax liabilities.
In the classical model, an increase in government spending shifts the
a. demand for loanable funds to the right. b. demand for loanable funds to the left. c. supply of loanable funds to the right. d. supply of loanable funds to the left.
What is the payoff for each firm in this simultaneous game?
a. Both firms will earn 0 b. Firm A will earn 50 and firm B will earn -10 c. Firm A will earn -10 and firm B will earn 50 d. Both firms will earn 25