The Morel Is a Prized Mushroom That Is Often Abundant

question 25

Multiple Choice

The morel is a prized mushroom that is often abundant in the Western United States in years after forest fires. Suppose two companies are buying morels from workers willing to find them. One company offers to pay workers $5.00 per pound, and the other company will pay workers only $4.00 per pound. Economists would say that:

• A) the company willing to pay only $4.00 has a comparative advantage in selling morels.
• B) the higher-paying company will attract the more creative and innovative pickers and the lower-paying company will attract the others.
• C) the lower-paying company will attract the more creative and innovative pickers and the higher-paying company will attract the others.
• D) this situation violates the law of one price and is not likely to persist.

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Definitions:

Percentage

A way of expressing a number as a fraction of 100, used to describe proportions or compare magnitudes.

Normal Model

A type of statistical distribution that is symmetric, bell-shaped, and fully described by its mean and standard deviation.

Percentage

A proportion or share expressed as a fraction of 100.

Normal Model

Refers to a probability distribution that is symmetrically distributed around the mean, commonly known as the normal (or Gaussian) distribution.