Why do professional basketball players earn more than police officers? Illustrate this situation graphically
What will be an ideal response?
Wages are based on the marginal revenue product of labor and the supply of labor. The marginal revenue product of professional basketball players is very high and the supply of people with the ability to play professional basketball is very low, whereas the marginal revenue product of police officers is much lower and the supply of people with the ability to be police officers is much higher.
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A mugger steals $25 from John Doe. What can an economist conclude?
A) Nobody gained in the "exchange." B) Both parties gained in the "exchange." C) Only the mugger's wealth has increased. D) Nothing, because economists study strictly voluntary exchanges.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, Point F
A. is efficient and attainable. B. cannot be produced with the current state of technology. C. represents underallocation of resources. D. represents what the people want.