David Ricardo, a nineteenth-century economist, wrote, "The price of corn is high not because a rent is paid, but a rent is paid because the price of the corn is high." Which of the following correctly explains Ricardo's assertion?
A. The high rents landowners charge tenant farmers cause high corn prices
B. If landowners weren't so greedy and lowered the rents they charge tenant farmers, the price of corn would fall
C. If the price of corn rises because of increased demand for corn, land rents will rise to absorb most of the extra revenue received by tenant corn farmers
D. If the price of corn rises, all other things being equal, increases in rent will cause some tenant farmers to stop growing corn
C. If the price of corn rises because of increased demand for corn, land rents will rise to absorb most of the extra revenue received by tenant corn farmers
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If you are willing to sell your lawn mower business for $355,00 . and someone offers you $420,00 . for it, this transaction will generate:
a. There is no surplus created b. $65,00 . worth of seller surplus and unknown amount of buyer surplus c. $30,00 . worth of buyer surplus and $35,00 . of seller surplus d. $65,00 . worth of buyer surplus and unknown amount of seller surplus
If a firm is using a resource hired in a perfectly competitive market, and if the price of the resource exceeds the marginal revenue product of the resource,
a. more of the resource should be used b. less of the resource should be used c. the firm should pay a lower price for the resource d. the firm should pay a higher price for the resource e. the firm is using the optimal amount of the resource
Describe the shape of the typical production possibilities curve and explain why it has this shape.
What will be an ideal response?
Hours of OperationMarginal Cost16212318424530636742
Krystal runs a nail salon and needs to decide how many hours to stay open. Table 2.2 illustrates her marginal costs of staying open for each additional hour. Suppose that we observe Krystal staying open 5 hours and her marginal benefit of staying open per hour is $36. If she is following the marginal principle, Krystal should:
A. stay open 1 more hour. B. stay open 2 more hours. C. stay open 1 fewer hour. D. stay open 2 fewer hours.