Author Question: Which of the following statements best defines the economics of the so-called superstar effect in ... (Read 255 times)

Sufayan.ah · **on:** Jun 30, 2018

Which of the following statements best defines the economics of the so-called superstar effect in the labor market?
a. This effect will result in cases in which individuals with large productivity differences receive vastly different compensation.
b. This effect occurs in cases in which individuals with small productivity differences receive very small differences in compensation.
c. This effect occurs when the firm hiring the superstar simply does not understand the term marginal-revenue product.
d. This effect occurs in cases in which individuals with small productivity differences receive vastly different compensation.
e. This effect usually occurs in industries in which a labor union has far-reaching powers.

Question 2

If demand is unit-elastic, then a 5 decrease in price will lead to an increase in quantity demanded by 5 units.
a. True
b. False
Indicate whether the statement is true or false