Professor Plum,who Earns $75,000 Per Year,read in the Paper Today

question 14

Multiple Choice

Professor Plum,who earns $75,000 per year,read in the paper today that the university pays its basketball coach one million dollars per year in exchange for the coach's agreement to remain at the university for at least three more years.The coach earns more than Professor Plum because:

• A)demand for sporting events exceeds demand for college courses.
• B)universities value sports over academics.
• C)the coach is able to earn economic rent due to his unique talents.
• D)the coach has more human capital than does Prof.Plum.

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Definitions:

Cartel Members

Firms or entities that agree to control prices and production to monopolize a market or restrict competition.

Incentive To Cheat

The motivation or tendency to deceive or engage in dishonest practices for personal gain, often seen in competitive situations.

Kinked-Demand Curve

A demand curve that has a flatter slope above the current price than below the current price. Applies to a noncollusive oligopoly firm if its rivals will match any price decrease but ignore any price increase.

Noncollusive

Describes competitive behavior among firms in an industry that do not engage in collusion or agreements to control prices or market shares.