Only a limited amount of high-quality wine-growing land is available. The firms that farm the land are identical. Because the demand curve hits the market supply curve in its upward sloping section, the firms initially earn positive profit. The owners of the land raise their rent so as to capture the profit. Show how the market supply curve changes (if at all). As a result of the landowners charging rents, the short-run market supply curve O A. shifts down. O B. shifts up. OC. remains unchanged. O D. may shift up or down. O E. becomes horizontal. Suppose some firms own the land and some rent. Do these firms behave differently in terms of their shutdown decision or in any other way? In the long-run, the firms that own the land O A. will be less likely to shut down because they will earn positive economic profit. O B. will produce more output because the minimum necessary for them to produce will be lower. OC. will be less likely to shut down because their opportunity costs will be lower. O D. will not behave differently from firms that rent the land because both will earm zero economic profit. O E. will produce less output because they will not have to pay rent.

Only a limited amount of high-quality wine-growing land is available. The firms that farm the land are identical. Because the demand curve hits the market supply curve in its upward sloping section, the firms initially earn positive profit. The owners of the land raise their rent so as to capture the profit. Show how the market supply curve changes (if at all). As a result of the landowners charging rents, the short-run market supply curve O A. shifts down. O B. shifts up. OC. remains unchanged. O D. may shift up or down. O E. becomes horizontal. Suppose some firms own the land and some rent. Do these firms behave differently in terms of their shutdown decision or in any other way? In the long-run, the firms that own the land O A. will be less likely to shut down because they will earn positive economic profit. O B. will produce more output because the minimum necessary for them to produce will be lower. OC. will be less likely to shut down because their opportunity costs will be lower. O D. will not behave differently from firms that rent the land because both will earm zero economic profit. O E. will produce less output because they will not have to pay rent.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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