A guarded barbed wire fence separates East and West Bovinia.Soccer players are paid twice as much in West Bovinia as in East Bovinia.This is an example of

Question

Quizplus · Accepted Answer

This is an example of a permanent resource price differential as the difference in soccer player salaries is likely driven by overall economic differences between the two regions that are unlikely to be quickly or easily changed. Inelastic supply, diminishing marginal revenue product, and economic rent do not apply to this scenario. While a temporary resource price differential could explain the difference in salaries in the short-term, the fact that the fence is described as guarded and barbed wire suggests that this is a long-standing separation between the two regions.

A Guarded Barbed Wire Fence Separates East and West Bovinia