Firm A offers a pay of $20,000 per year, and Firm B offers a pay of $16,000 per year. neither the economic rent nor the opportunity cost of production.Īnswer : d Scenario 11.1: Alfred is looking for a job and he receives an offer from two firms. both economic rent and opportunity cost.ī. In a resource market where earnings include both economic rent and opportunity cost, the supply curve is parallel to the vertical axis.Īnswer : a When a resource can earn as much in its best alternative use as in its present use, then the supply curve for the resource is:Īnswer : a In a resource market where a horizontal supply curve determines the equilibrium wage and the demand curve determines the equilibrium quantity, the earnings of the resource include:Ī. In a resource market where all earnings are economic rent, the supply curve is downward sloping.ĭ. In a resource market where all earnings are economic rent, the supply curve is parallel to the horizontal axis.Ĭ. In a resource market where all earnings are opportunity cost, the supply curve is parallel to the horizontal axis.ī. Farmers producing wheat in the United States.Īnswer : c The supply curve for a resource that has zero opportunity cost is:Īnswer : d Which of the following is true of economic rent and opportunity cost in a resource market?Ī. A software engineer possessing unique knowledge required to resolve a particular company's latest software bug.ĭ. Unskilled day labor at a construction site.Ĭ. A labor working as a cleaner in a commercial building.ī. The more elastic the supply of a resource, the lower the economic rent as a proportion of total earnings.Īnswer : d The _ of a resource is the amount that the resource could earn in its best alternative use.Īnswer : a The division of earnings between opportunity cost and economic rent depends on the _ of the resource.Īnswer : c Which of the following resources will earn an economic rent that is much higher than its opportunity cost?Ī. The more elastic the supply of a resource, the higher the economic rent as a proportion of total earnings.ĭ. The more the elasticity of demand of a resource, the lower the economic rent as a proportion of total earnings.Ĭ. The more the elasticity of demand of a resource, the higher the economic rent as a proportion of total earnings.ī. Economic rent is also referred to as the producer surplus earned by resource suppliers.Īnswer : d The portion of a resource's earnings that exceeds the amount required to keep the resource in its present use is called:Īnswer : b Which of the following statements is true?Ī. Economic rent is also referred to as the consumer surplus earned by resource consumers.ĭ. ![]() Economic rent is higher if resource supply is elastic.Ĭ. Economic rent is lower if resource supply is less elastic.ī. Economic rent is the portion of a resource's total earnings below its marginal cost.Īnswer : b Which of the following is true of economic rent?Ī. Economic rent is the portion of a resource's total earnings below its opportunity cost.ĭ. Economic rent is the portion of a resource's total earnings above its opportunity cost.Ĭ. Economic rent is the portion of a resource's total earnings above its marginal cost.ī. a firm replaces the cheaper resource with the expensive resource.Īnswer : c Which of the following statements defines economic rent?Ī. a firm replaces the expensive resource with the cheaper resource.ĭ. a firm's ability to hire the relatively cheaper resource decreases.Ĭ. a firm's ability to hire the relatively expensive resource decreases.ī. ![]() arise due to differences in worker productivitiesĪnswer : c As the price of a resource falls, all else constant, we observe that:Ī. arise due to differences in years of experienceĭ. Such differences in resource prices: _.ī. The demand for resources that can be put to different uses decreases.Īnswer : c A factory worker working night shifts in a factory gets paid more than a factory worker working day shifts. Resources adjust across uses until they earn the same in different uses.ĭ. Resources adjust across uses until they earn significantly more in one particular use.Ĭ. The prices of resources that can be put to different uses increase.ī. An increase in the demand for woolens in winter.Īnswer : c Which of the following happens when resources are freely mobile and when the nonmonetary benefits of supplying resources to alternative uses are identical?Ī. A decline in the demand for building products following a drop in housing demand.ĭ. An increase in the demand for gasoline following a fall in the price of petroleum products.Ĭ. A decline in the demand for labor because of outrageous demands by trade unions.ī. Which of the following can be categorized as derived demand?Ī.
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