The optimal level of resource use comes when
A. MRP exceeds input price.
B. MRP is less than input price.
C. MRP equals input price.
D. use of the resource exhausts the producer’s funds.
Answer: C
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Fish in the ocean would be considered:
A. a common resource. B. a private good. C. a public good. D. an artificially scarce good.
Utility is the benefit a consumer gets from consuming a good.
Answer the following statement true (T) or false (F)
Suppose that, recognizing that an efficient market outcome may not me equitable, a central planner announces that each agent's net benefit (the difference between the reservation value and the price paid) beyond a certain amount will be taken away and redistributed to other agents whose new benefit is below the specified level. This policy is expected to produce ___________
A) an efficient outcome where every agent has the same net benefit B) an efficient outcome where every agent has 0 net benefit C) an inefficient outcome where no trade will occur D) an inefficient outcome where trades will occur at the higher price than at the equilibrium
Define the term rent. Explain why confiscation of rents would cause more than a simple transfer of income from resource owners to the government.
What will be an ideal response?