Questions and Answers on Economics

T or F: Markets are designed to levelized prices between different countries. Explain.

True. A comprehension of the distinctions in value levels is vital in the examination of monetary information, for example, total national output (GDP), in light of the fact that higher relative costs could influence an economy to look more advantageous than it truly is. Watching value level contrasts is likewise vital in the investigation of the improvement of the EU's single market for products and ventures.

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T or F: A quasi-rent is a long-term profit a firm earns in a competitive market. Explain.

False. The idea of quasi-rent was pioneered by Alfred Marshall. Marshall defined it as surplus profit created by the elements of generation, aside from land. The profit from machines and instruments are characterized as quasi-rent. That being said, quasi-rent, therefore, alludes to the salary created when the demand increases all of a sudden. It is utilized for a short time-frame. In a financial lease, the supply of factor is settled, for example, land. Be that as it may, in semi lease the supply of factor is brief and can be expanded or diminished after some time, for example, machine. Thus, cannot qualify as a long-term profit.

T or F: A union has two possible equilibrium solutions to the wage bargain with firms. Explain.

False. A worker's party is an association of specialists that consults with employers over wages and working conditions. A worker's guild tries to change the adjust of energy amongst bosses and specialists by expecting managers to manage laborers all things considered, as opposed to as people. Accordingly, arrangements amongst associations and firms are some of the time called aggregate haggling. A union has more than two solutions to wage bargains with firms.

T or F: A firm should always hire labor up to the point where the value of the marginal product equals the wage. Explain.

In the event that minimal item is more prominent than the genuine wage, the estimation of the peripheral item is more prominent than the cost of utilizing an extra laborer (the genuine wage); benefits will increment if the specialist is employed. On the off chance that minor item is not as much as the genuine wage, the estimation of the negligible item is not as much as the cost of utilizing an extra specialist (the genuine wage); benefits will increment if the laborer is laid off. At the point where the minor item and the genuine wage are equivalent, benefits are boosted.

T or F: Differential rents exist when land is all of the same quality. Explain.

True. The land price is controlled by the monetary rule of most noteworthy and best utilization of land which creates the most noteworthy net return in any term, over some stretch of time. The property estimation is subject to the auxiliary traits, land rates, purpose and the area of the land. It is dictated by the particular trait of the land, for example, land use, area, availability, appearance, and so forth.

T or F: A natural monopoly always set its price equal to the marginal cost. Explain.

False. A monopolist's peripheral income is constantly not exactly or equivalent to the cost of the product. Peripheral income is the measure of income the firm gets for each extra unit of yield. It is the contrast between total income - cost times items sold - at the new level of yield and aggregate income at the past yield.

T or F: The Clayton Act was the first antitrust law passed in the United States. Explain.

False. The Clayton Act was passed to strengthen the Sherman Antitrust law of 1890.

T or F: There is no conflict between efficiency and market power when firms become large. Explain.

False. Firms need to constantly adjust their efficiency to put up with increasing market base.

T or F: The elasticity of substitution plays little role in defining markets under antitrust law enforcement. Explain.

False. Substitution means having another factor or person take over other's duties. In such a case, the antitrust law's clauses need to strictly adhere.

T or F: Countervailing power is created when the government weighs in against big business. Explain.

False. Countervailing power can be created by any two businesses as well, it does not have to involve the government.