The same year that Derek Jeter, one-time shortstop for the New York Yankees, received an annual salary of $23.2 million, the president of the United States received an annual salary of $400,000. Based on marginal productivity theory and assuming these markets are competitive, this salary differential indicates that:
A. the president of the United States contributed much more to society than did Derek Jeter.
B. the salary differential between Derek Jeter and the president of the United States indicated that their marginal productivities cannot be compared.
C. Derek Jeter contributed much more to society than did the president of the United States.
D. Derek Jeter and the president of the United States made equal contributions to society.
Answer: C
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If the official unemployment rate increases from December to January because the Christmas season is over, we can conclude that _____ is responsible for the increase
a. seasonal unemployment b. cyclical unemployment c. structural unemployment d. frictional unemployment e. underemployment
In the AD/AS model, a point where the economy's long-run AS curve, short-run AS curve, and AD curve all intersect at a single point represents a point where:
a. real GDP is equal to its full-employment level. b. all of these choices. c. the conditions of short-run equilibrium are fulfilled. d. the conditions of long-run equilibrium are fulfilled.
Most economists believe the short-term labor supply curve is ______.
a. elastic compared to demand b. inelastic compared to demand c. highly responsive to taxes d. highly responsive to wages
Suppose that one firm produces a product that results in negative external costs to society. This information suggests that
A. at the market price, quantity demanded is less than quantity supplied. B. the equilibrium market price of the product includes the external costs borne by society. C. resources are under-allocated to the firm. D. resources are over-allocated to the firm.