Which of the Following Is an Example of Rent Seeking

question 176

Multiple Choice

Which of the following is an example of rent seeking behavior?

• A)Apple earned large profits from the development and sale of the iPhone.
• B)Amazon introduced the Kindle to compete with Sony's Digital Reader. Amazon was motivated by the desire to earn profits from the Kindle but also increased the choice of digital music players available to consumers.
• C)U.S. sugar firms convinced Congress to impose a quota on imports of sugar.
• D)Recent increases in cigarette taxes faced little opposition from voters, many of whom were rationally ignorant with respect to the tax.

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Definitions:

Wage Rate

The amount of money paid to an employee per unit of time, often per hour or per year, for labor services.

Marginal Product of Labor

The additional output produced as a result of adding one more unit of labor, all else being constant.

Optimal Level of Resource Use

The most efficient, sustainable use of resources that maximizes benefits while minimizing negative environmental and economic impacts.

Marginal Revenue Product (MRP)

The additional revenue generated from employing one more unit of a resource, like labor or capital.