Consider two resource markets in which the demand curves slope downward.In market A, the supply curve is horizontal, equilibrium price is $6, and 100 units of the resource are hired.In market B, the supply curve is vertical, equilibrium price is $20, and 30 units of the resource are hired.Which of the following is true?
A)All of the resource earnings in market A are economic rent.
B)All of the resource earnings in both markets are economic rent.
C)All of the resource earnings in market B are economic rent.
D)None of the resource earnings in either market is an opportunity cost.
E)None of the resource earnings in either market is economic rent.

Question

Quizplus · Accepted Answer

In market B, the supply curve is vertical, indicating that the quantity supplied is fixed and does not change with price. Therefore, all earnings in market B are economic rent, as they are not influenced by opportunity costs.

Consider Two Resource Markets in Which the Demand Curves Slope