Consider two resource markets in which the demand curves slope downward. In market A, the supply curve is horizontal, equilibrium price is $6, and 100 units of the resource are hired. In market B, the supply curve is vertical, equilibrium price is $20, and 30 units of the resource are hired. Which of the following is true?
a. Total resource earnings are the same in both markets.
b. Total resource earnings are greater in market A.
c. Total resource earnings are greater in market B.
d. There is more economic rent in market A.
e. There is derived demand in market A, but not in market B.
A
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Heavy advertising expenditures usually indicate
a. oligopoly. b. pure competition or monopolistic competition. c. oligopoly or monopoly. d. differentiated pure competition or monopoly.
In an advertisement for credit cards, the statement is made, "Think of a credit card as smart money." An economist's reaction to this would be that a credit card is:
A. dumb money. B. simply money. C. actually better than money. D. not money.
According to the real business cycle theory, technological advances
A. decrease the marginal product of labor, which causes real wages and output to increase. B. increase the marginal product of labor, which causes real wages and output to increase. C. increase the marginal product of labor, which causes real wages to increase and output to decline. D. increase the marginal product of labor, which causes real wages and output to decline.
Refer to Table 2-16. If the two countries specialize and trade, who should export cell phones?
A) They should both be importing cell phones. B) Finland C) Estonia D) There is no basis for trade between the two countries.