1. Some people have argued that the government should provide medical care to everyone. Under this system:
A. the price of medical care will allocate resources efficiently.
B. the price of medical care will ration resources efficiently.
C. prices will not ration medical care so there will be no scarcity.
D. prices will not ration medical care so some other rationing method will be used.
2. Professor Plum, who earns $75,000 per year, read in the paper today that the university pays its basketball coach one million dollars per year in exchange for the coach's agreement to remain at the university for at least three more years. The coach earns more than Professor Plum because:
A. demand for sporting events exceeds demand for college courses.
B. universities value sports over academics.
C. the coach is able to earn economic rent due to his unique talents.
D. the coach has more human capital than does Prof. Plum.
3. Duke is a particularly highly skilled negotiator. The law firm that hires Duke is able to collect twice as much revenue per hour of Duke's time than it can for any other negotiator in town. The increased revenue will:
A. be evenly split between Duke and the law firm to maximize surplus.
B. all go to the law firm because the firm bears the risk of running the business.
C. all go to Duke because, if it didn't, another firm could hire Duke away.
D. be split, with 75% going to Duke and 25% going to the law firm.