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1066 2
2010-03-09
from Schweser 2010 Qbank 97006
                                                                                
statement: If we comapre any two productive inputs, the one with the higher
                   MRP(marginal revenue product) will earn greater economic rent.
                                                                                
why this statement is false? can't we imply higher MRP will result in steeper
supply curve(more inelastic supply)?
Or in labor market MRP is the demand curve while for economic rent we only
consider the difference bwtween the wage determined and the opportunity cost?
                                                                                
thanks for viewing.
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2010-3-9 22:03:59
When MRP is high>>>marginal revenue provided by worker is high,so the supply of worker become elastic as their bargining power is high. This will lead to a more elastic supply curve of product and finally lead to a lower economic rent earned....
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2010-3-10 02:27:38
the supply of worker become elastic as their bargining power is high.

kina weird here, high bargining power  results in more inelastic supply makes more sense.
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