Question

When does a resource earn only economic rent?

When the supply curve of the resource is relatively elastic
When the supply curve of the resource is relatively inelastic
When the supply curve of the resource is backward bending
When the supply curve of the resource is vertical
When the supply curve of the resource is horizontal

A bubble or panic generally occurs in the stock market because of:

deliberate government actions to control inflation.
expansionary monetary policies undertaken by the government.
upswings in the business cycle.
an increase in the profitability of the firms.
irrational, or abnormal forecasts, or market valuations.

The markets for renewable and nonrenewable resources operate to ensure that:

the current and future prices of such resources remain high.
the current and future wants for these resources are satisfied in the least costly manner.
the current price of such resources should remain low but the future prices should increase to increase profitability of the producers.
the producers using these resources earn above-normal profits even in the long run.
the cost of extraction of such resources increases with an increase in price.

Answer 1

Answer:

Economic rent can be earned when supply curve is vertical.

Explaination:

When supply curve is vertical then with increase in price, increased revenue will be earned by the resource only.

Bubble occurs in stock market because of irrational, or abnormal forecasts, or market valuations.

Explanation:

Expansionary or contractionary monetary policies by the government may affect the stock market but they do not create panic in the stock market.

Upswings in the business cycle and the increased profitability of the firms give a boost to the share market. It does not create bubble or panic.

Panic can occur only because of the rumours, false tips, etc.

The market for renewable and nonrenewable resources operate to ensure that "the current and future wants of these resources are satisfied in the least costly manner".

Market is a place where both buyers and the sellers meet. Both are rational and knows about the availability and present requirement of the renewable and non renewable resources. Where buyers want to minimize their costs selers wants to increase their profits both at present and in the future. So, no one can gain abnormally from the market either in the present or in the future.

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