Suppose that Philip is the best contractor in town, and he makes $400,000 a year. Suppose that Julia Roberts is the best and highest paid actress in Hollywood, and she makes $13 million per movie. Both are the best in their respective fields of work. One reason for the significant difference in incomes has to do with the nature of the service each offers. Philip's contracting services
a. can be provided to an unlimited number of customers in a year, but Julia's work is sold to only a few individuals in a year.
b. can only be provided to a limited number of customers in a year, but Julia's work is sold to millions of individuals in a year — i.e., to anyone who has the willingness and ability to pay for admission to her movies.
c. can be provided to a unlimited number of customers in a year, and Julia's work is sold to millions of individuals in a year — i.e., to anyone who has the willingness and ability to pay for admission to her movies.
d. can only be provided to a limited number of customers in a year, and Julia's work is sold to only a few individuals in a year.
b
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In an economic downturn, sticky wages and prices reduce the economy's speed of adjustment because
A) hyperinflation will likely occur. B) businesses are unable to adjust quickly to changes in aggregate demand. C) they cause deflation. D) union workers would likely quit and look for work elsewhere.
An indifference curve shows _____
a. the relationship between total and marginal utility b. the relationship between the quantity of a good and the maximum attainable satisfaction c. the various combinations of two goods that give a consumer the same amount of satisfaction d. the relationship between the price and quantity of a good that a consumer is able to purchase e. that the quantities of a good that give a consumer maximum satisfaction are directly related to price
A recession occurs only if there are two consecutive quarters of declining real GDP
a. True b. False
A mortgage that allows the borrower to pay less than the interest due for a few years is a
A. negative-amortization mortgage. B. traditional, thirty-year fixed-rate mortgage. C. "liar loan." D. credit-default swap.