Consider Two Resource Markets in Which the Demand Curves Slope

question 149

Multiple Choice

Consider two resource markets in which the demand curves slope downward.In market A,the supply curve is horizontal,equilibrium price is $10,and 90 units of the resource are hired.In market B,the supply curve is vertical,equilibrium price is $30,and 40 units of the resource are hired.Which of the following is correct?

• A) In market A,total earnings = $900,economic rent = $450,opportunity cost = $450
• B) In market A,total earnings = $900,economic rent = $0,opportunity cost = $900
• C) In market A,total earnings = $900,economic rent = $900,opportunity cost = $0
• D) In market B,total earnings = $1,200,economic rent = $300,opportunity cost = $900
• E) In market B,total earnings = $1,200,economic rent = $0,opportunity cost = $1,200

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Definitions:

Dispositional Optimism

A general expectation that good things will happen, characterized by a stable tendency to believe that the future will bring positive outcomes.

Coping

The process of managing taxing circumstances, expending effort to solve personal and interpersonal problems, and seeking to master, minimize, or tolerate stress or conflict.

Traumatic Events

Incidents that cause severe psychological distress and can lead to lasting mental health issues.