I'm stucked on these for economic questions...I was thinking A for the first one and C for the last one?
a. easy entry into industries.
b. dynamic change and uncertainty.
c. X-inefficiency.
d. a decline in entrepreneurship.
2 Different rents on land reflect differences in the marginal revenue productivity of land.
a. True
b. False
3 If Congress were to pass a law exempting interest on saving from taxation, the:
a. supply of loanable funds would decrease and the equilibrium interest rate rise.
b. supply of loanable funds would increase and the equilibrium interest rate fall.
c. demand for loanable funds would increase and the equilibrium interest rate rise.
d. equilibrium interest rate would be unaffected.
4 A monopsonistic employer:
a. has a perfectly elastic labor supply curve.
b. is necessarily a monopolist in the product market.
c. confronts a marginal resource (labor) cost that is greater than the wage rate.
d. confronts a marginal resource (labor) cost that is less than the wage rate.
Answer:
1. B. because of uncertainty and change, profit opportunities may arise that can only be exploited by some (not all) entrepreneurs.
2. A.
3. B. The reduction in tax is effectively a downward shift of supply curve.
4. C. If the monopsonist raises the wage to get one more of labor, it raises wage for all previous units, hence MRC > W.
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