/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Q.1 Which of the following individua... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 21: Q.1 (page 483)

Which of the following individuals would you expect to have a high level of economic rent, and which would you expect to have a low level of economic rent? Explain why for each.

a. Bob has a highly specialized medical skill shared by very few individuals.

b. Sally has never attended school. She is 25 years old and is an internationally known supermodel.

c. Tim is a high school teacher and sells insurance part-time.

Short Answer

Expert verified

a. Bob's exceptionally specialized medical skill is a shortage and is shared by not many people.

b. Sally is a globally known very model and has an unprecedented ability to acquire major league salary

c. Tim is only a teacher and a part-time insurance consultant and can never see large cash.

Step by step solution

01

Given Information

Economic rent is an abundance instalment made over the sum required and emerges from states of shortage. This idea can be utilized to show different aberrations in evaluation.

02

Explanation 

a. Since, Bob's exceptionally particular clinical is a shortage and is shared by not many people. Consequently, the merits an elevated degree of financial lease.

b. Sally has never gone to class, she is a globally known very model and has an unprecedented ability to acquire a major league salary, hence, Sally has a high level of economic rent

c. Tim is only a teacher and a part-time protection expert and can never see large cash. He is viewed as a normal worker and thus he has a low level of the monetary lease. Tim's economic rent is low.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Understand the concept of economic rent.

Suppose that the interest rate in Japan is only 2percent, while the comparable rate in the United States is localid="1651988274892" 4percent. Japan's rate of inflation is 0.5percent, while the U.S. inflation rate is 3percent. Which economy has the higher real interest rate?

Outline the differences between common stock and preferred stock.

Why do you think that people have experienced even more difficulties than usual in predicting the prices of shares of stock issued by individual companies?

The owner of WebCity is trying to decide whether to remain a proprietorship or to incorporate. Suppose that the corporate tax rate on profits is 20percent and the personal income tax rate is localid="1653216490078" 30percent. For simplicity, assume that all corporate profits (after corporate taxes are paid) are distributed as dividends in the year they are earned and that such dividends are subject to tax at the personal income tax rate.

a. If the owner of WebCity expects to earn localid="1653216495193" \(100,000in before-tax profits this year, regardless of whether the firm is a proprietorship or a corporation, which method of organization should be chosen?

b. What is the dollar value of the after-tax advantage of the form of organization determined in part (a)?

c. Suppose that the corporate form of organization has cost advantages that will raise beforetax profits by localid="1653216505277" \)50,000. Should the owner of WebCity incorporate?

d. Based on parts (a) and (c), by how much will after-tax profits change due to incorporation?

e. Suppose that tax policy is changed to completely exempt from personal taxation the first localid="1653216517393" $40,000per year in dividends. Would this change in policy affect the decision made in part (a)?

f. How can you explain the fact that even though corporate profits are subject to double taxation, most business in the United States is conducted by corporations rather than by proprietorships or partnerships?
See all solutions

Recommended explanations on Economics Textbooks

Taxation Economics

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.