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lvnrn2012 lvnrn2012
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A year ago

The demand and supply curves shown below apply to a competitive market for a factor used in the production of widgets.

Short description: A graph plots quantity of factor against factor price in dollars. Long description: The horizontal axis representing the number of factors ranges from 0 to 60, in increments of 10. The vertical axis representing factor price (dollars) ranges from 5 to 11, in increments of 1. The graph plots two lines and five points. The five points are as follows: A (20, 6), B (40, 8), C (50, 9), D (30, 11), and E (30, 7). From all five points, a horizontal dashed line and a vertical dashed line are drawn to meet the axes. Line, S passes through the following points: A, E, B, and C. Line, D passes through the following points: D and B. The two lines intersect at B.

FIGURE 13-2

Refer to Figure 13-2. This factor market is in equilibrium at point B. Which of the following statements best describes factor payments at point B?



▸ Total income paid to the factor is $8.

▸ Total factor earnings are $320 and the 40th unit earns economic rent of $8.

▸ Total factor earnings are $320 and the 40th unit earns zero rent.

▸ Total of economic rent plus transfer earnings is $320.

▸ Economic rent to the 40th unit is $320.
Textbook 
Microeconomics

Microeconomics


Edition: 17th
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wellsarwellsar
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