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1. Given 2 jobs: Job A which pays $1,000 in the 1st year and $3,000 in the 2nd year Job B which requires attending a seminar in the first year costing $3,000 (to be paid out of pocket) then making $8,000 in the 2nd year. If a person has a discount rate of 9% which one would he choose?
a. Job A
b. Job B
c. either one since IRR = 9%
d. none of the above
2. Monopoly rents refer to The profits earned by doctors due to their limited supply brought about by
a. the profits earned by doctors due to their high quality work
b. the profits earned by doctors due to their limited supply brought about by barriers to entry
c. the losses incurred by doctors due to their limited supply brought about by barriers to entry
d. price of tickets of broadway shows that doctors attend
e. none of the above
Evaluate the relative importance of economies of scale and comparative advantage in causing the following.
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