Define rent seeking. Is rent-seeking activity likely to be highly profitable in the long run? Why or why not?
What will be an ideal response?
Rent seeking is using potentially productive resources to try and obtain transfers from the government. Rent seeking is not likely to be highly profitable in the long run because profits from rent seeking will encourage new rent seekers to enter the market. Increased competition for rents will reduce benefits from rent-seeking activity until they approximate a normal rate of return.
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The increase in the demand for widgets, shown in the figure above, is the result of an increase in income. Therefore, widgets
A) are a normal good. B) are an inferior good. C) are elastically demanded. D) are inelastically demanded.
The slope of the budget line is the amount of one commodity that a consumer must give up in order to obtain an additional unit of the other commodity
a. True b. False Indicate whether the statement is true or false