Suppose the supply and demand of land for natural gas extraction are imperfectly elastic. Given that coal is a potential substitute for natural gas in energy applications, a change in the price of coal may shift the demand curve for natural gas
What happens to the economic rents assigned to land on which natural gas is extracted if the price of coal declines? A) Rents increase
B) Rents are positive and remain unchanged
C) Rents decrease
D) Rents are zero before and after the change
C
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Explain how we can estimate the shape of a person's indifference map by observing choices under different economic circumstances. Explain also why we will not be able to identify any non-convexities in tastes from our observations.
What will be an ideal response?
A student makes the following argument: "When a market is in equilibrium, there is no consumer surplus. We know this because in equilibrium, the market prices is equal to the price consumers are willing to pay for the good. Briefly explain whether you agree with the student's argument.
Why did high fertility of the early population occur, according to Hughes and Cain (2011)?
(a) More than half of the population were at ages where fertility is high—in 1820, for example, the median American was less than 17 years old. (b) A nation composed mainly of farmers and people planning to farm had every reason to create large families. (c) Children can be considered investment goods and the rate of return on a child born to a farm family was relatively high. (d) High fertility occurred due to all of the above reasons.
What statement most accurately describes the U.S. colonial economy in the 1700s?
a. The Middle Colonies had big trade surpluses from their large shipments of food. b. The majority of the population lived in the large urban areas along the Atlantic coast. c. Once indentured servants completed their indentures, they moved to the lower South, where the agricultural productivity was highest. d. Colonial America was the first region in the world to permanently use paper money.