An example of a good that is rival in consumption is:
A. an air show over the whole city.
B. a floral display at a large university's graduation ceremony.
C. a scientific discovery that allows florists to grow flowers to which no one is allergic.
D. a Big Mac.
Answer: D
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Measurements of TFP indicate that the East Asian success story is based on
A) a significantly different economic model from the one followed in the West. B) unusually large amounts of innovation. C) rapid increases in the education of the work force. D) high amounts of savings and investment. E) large current account surpluses.
Assume that you own an exhaustible resource that is sold competitively. The price of the resource is:
Pt + 1 - C = 1.08(Pt - C), where t = 0 at the beginning of 2005, P = price in dollars per ton, and C = marginal cost of extraction (fixed over time). It is also known that the demand for the resource is: Q = 1,000,000 - 25,000 P, where Q represents output in tons per year. If the beginning of 2005 price is $30 per ton and the marginal cost of extraction is $10 per ton, what will the price be at the end of 2009? What is the user cost of production in 2009? Is it different from the user cost for 2005? Explain. How much of the resource will be extracted in 2009? What is the market rate of interest on money? Explain.