Suppose That a Large Rogue Wave Destroys the (Thankfully Unoccupied)

question 198

Multiple Choice

Suppose that a large rogue wave destroys the (thankfully unoccupied) fleet of swordfish fishing boats docked in the Gloucester, Massachusetts harbor. What happens to the earnings of fishermen and women in Gloucester?

• A)The reduction in the supply of fishing boats increases the marginal productivities of Gloucester fishermen and women, which causes the equilibrium wage to fall.
• B)The reduction in the supply of fishing boats reduces the marginal productivities of Gloucester fishermen and women, which causes the equilibrium wage to fall.
• C)The reduction in the supply of fishing boats increases the marginal productivities of Gloucester fishermen and women, which causes the equilibrium wage to rise.
• D)The reduction in the supply of fishing boats reduces the marginal productivities of Gloucester fishermen and women, which causes the equilibrium wage to rise.

Identify factors contributing to differences in compensation, including compensating differentials and human capital investment.

Evaluate the impact of technology and education on income inequality.

Understand the sources of household wealth and income.

Examine occupational segregation and its effect on income distribution.

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Definitions:

Quasi-Fixed Costs

Costs that are not directly tied to the level of production or output, such as salaries or rent, which remain somewhat constant until a significant change in operations occurs.

Total Cost Function

A mathematical expression that calculates the total cost of producing a given level of output, incorporating both fixed and variable costs.

Marginal Cost

The surplus cost attributed to generating one more unit of a product or service.

Production Function

A mathematical representation showing the relationship between input factors and the output of goods or services.