The common habit of viewing middlemen as unproductive bandits on the highway of free trade assumes
A) transaction costs are zero.
B) information is a free good.
C) voluntary exchange is not mutually beneficial.
D) all of the above.
E) none of the above.
D
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Each of the following, except one, can explain why a given job pays a compensating wage differential. Which is the exception?
a. The job requires costly training. b. The job is dangerous. c. The job is in a city with a high cost of living. d. The job requires a very high level of physical exertion. e. An increase in product demand raises the demand for labor in this job.
Producers are willing to offer greater quantities for sale at higher prices because
a. they have the incentive to pay the increasing opportunity cost of resources necessary to attract them from alternative uses b. they will decrease their profits by expanding production at higher prices c. the government orders them to do so d. lower prices attract new firms, which have higher costs of production e. they hire superior quality, higher-priced resources as production expands