Consider Two Resource Markets,A and B,where the Demand Curves for the Resources

question 5

Multiple Choice

Consider two resource markets,A and B,where the demand curves for the resources slope downward.The supply curve of resource A is horizontal,and the supply curve of resource B is vertical.In market A,the equilibrium price is $6,and the equilibrium quantity is 100 units.In market B,the equilibrium price is $20,and the equilibrium quantity is 30 units.Which of the following is true?

• A)All of the resource earnings in market A are opportunity costs.
• B)All of the resource earnings in both markets are opportunity costs.
• C)All of the resource earnings in market B are opportunity costs.
• D)None of the resource earnings in either market are an opportunity cost.
• E)None of the resource earnings in either market are economic rent.

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Definitions:

Semiannual Interest Payments

These are interest payments made twice a year on a financial instrument, such as a bond.

Coupon Rate

The annual interest rate paid by a bond's issuer to its bondholders, usually expressed as a percentage of the face value.

Face Value

The nominal or dollar value printed on a stock, bond, or other financial instrument, representing its legal value.

Maturity

The date on which the principal amount of a financial instrument, such as a bond or loan, is to be paid back in full.