Diamonds are nature's hardest substance. Classify each of the following diamonds as land, labor, capital, entrepreneurship, or none of the above. Explain your choice.
a . an unmined diamond
b. a diamond in DeBeers' vault (DeBeers is the world's biggest diamond mining company.)
c. a diamond in a jeweler's display case at the shopping mall
d. a diamond on your or your fiancée's finger
e. an industrial-grade diamond in your dentist's drill
f. the diamonds in the blade that the highway department uses to cut concrete
a . land, because the diamond is in its natural state
b. capital, because it's part of DeBeers' inventory
c. capital, because it's part of the jeweler's inventory
d. none of the above, because it's a good that has been consumed by a household, not a resource
e. capital, because it's being used in the production of your dentist's services
f. capital, because the highway department is using it to produce its output (roads, road repair)
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The burden of a tax falls entirely on sellers if ________
A) the price elasticity of demand is unitary elastic B) the price elasticity of supply is greater than 1 C) the income elasticity of demand is high D) the price elasticity of supply is zero (perfectly inelastic)
In Figure 13-3 above, suppose that the Fed maintains a fixed real money supply and that commodity demand is also fixed. The range of shifts in the LM curve, LM1 to LM2 lead to
A) an unstable equilibrium output, C to B1. B) a stable equilibrium output, C. C) an unstable equilibrium output, B0 to B1. D) a stable equilibrium output, B0 to B1.