Author Question: If the best lawyer in town is also the best at operating a word processor, then according to ... (Read 38 times)

elizabeth18 · **on:** Jun 29, 2018

If the best lawyer in town is also the best at operating a word processor, then according to economic reasoning, this person should

A) split her time evenly between being a lawyer and a word processor.
B) specialize in being a word processor because it is more capital-intensive.
C) specialize in being a lawyer because its opportunity cost is lower.
D) should pursue the activity she enjoys more.

Question 2

What three assumptions must hold for the allocation of resources among firms to be efficient?

What will be an ideal response?

xiaomengxian · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

C

Answer to Question 2

For the allocation of resources among firms to be efficient, factor markets must be competitive and open, all firms must pay the same price for inputs, and all firms must maximize profits.