Consider two resource markets in which the demand curves slope downward.In market A,the supply curve is horizontal,equilibrium price is $10,and 90 units of the resource are hired.In market B,the supply curve is vertical,equilibrium price is $30,and 40 units of the resource are hired.Which of the following is incorrect?
A) In market A,total earnings = $900
B) In market A,opportunity cost = $900
C) In market B,total earnings =$1,200
D) In market B,economic rent = $1,200
E) In market B,opportunity cost = $900

Question

Quizplus · Accepted Answer

In market B, the supply curve is vertical, meaning the opportunity cost is zero because the quantity supplied does not change with price. Therefore, the opportunity cost cannot be $900.

Consider Two Resource Markets in Which the Demand Curves Slope