Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Question
Chapter 18, Problem 6DQ
To determine
The significance of principle of rent.
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Nick's salary is pure economic rent. What does this statement imply about Nick's next best alternative salary?
Recall our example of t-shirt manufacturing in Lubbock. You started the business with
your friend and selling each t-shirt for $10. However, people are not buying from you.
Why is that happening? Now you figured that there are cheaper means to produce each
t-shirt at $7 and you changed your t-shirt price to $9 making some positive economic
rent. Will this last forever? Why or why not?
how much a person or family earns in any given period is called
Chapter 18 Solutions
Economics: Principles & Policy
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