The Figure Given Below Represents Equilibrium in the Labor Market

question 24

Multiple Choice

The figure given below represents equilibrium in the labor market with the demand and supply curves of labor.Figure 14.6
In the figure,
D = MRP implies demand for labor = Marginal Revenue Product
MFC represents Marginal Factor Cost curve
S represents the supply curve of labor

-If a person is earning $80,000 per year as a dentist and could earn at most $45,000 per year doing something else, his transfer earnings are ____, whereas his economic rent is ____.

• A)$45,000, $35,000
• B)$80,000, $45,000
• C)$45,000, $80,000
• D)$80,000, $35,000
• E)$35,000, $45,000

---

Definitions:

Dissolution

The process of formally closing or ending a business or legal entity.

Limited Partnership

A business structure where at least one partner has unlimited liability and at least one partner has liability only up to the amount they have invested.

Fiduciary Duty

A legal obligation of one party to act in the best interest of another party, such as the duty a trustee has to beneficiaries.

Liability

Refers to the state of being legally responsible for something, such as a debt or obligation.