Exhibit 11.2

-Refer to Exhibit 11.2,which shows the labor market.The vertical axis measures wage in dollars,and the horizontal axis measures labor in hours.The tenth unit of labor is earning a wage of _____
A)$4, all of which is economic rent.
B)$4, none of which is economic rent.
C)$8, all of which is economic rent.
D)$8, none of which is economic rent.
E)$8, half of which is economic rent.

Question

Exhibit 11.2
 
-Refer to Exhibit 11.2,which shows the labor market.The vertical axis measures wage in dollars,and the horizontal axis measures labor in hours.The tenth unit of labor is earning a wage of _____
A)$4, all of which is economic rent. 
B)$4, none of which is economic rent. 
C)$8, all of which is economic rent. 
D)$8, none of which is economic rent. 
E)$8, half of which is economic rent.

Quizplus · Accepted Answer

The tenth unit of labor is earning $8, with half of this amount ($4) being economic rent. Economic rent is the portion of the wage that exceeds what is necessary to keep the labor in its current use. The difference between the wage at the tenth unit of labor ($8) and the wage that would have been sufficient to employ that unit of labor (which can be inferred as $4, the wage at which additional units of labor start to be employed) represents the economic rent.

Exhibit 11.2 -Refer to Exhibit 11.2,which Shows the Labor Market.The Vertical Axis