Which of the following is consistent with rent seeking behavior? Select one or m

Question

Which of the following is consistent with rent seeking behavior?

Select one or more:

a. A Nike jacket is worth $400 to Leila. She seeks a seller on amazon that will get it to her at the cheapest price possible, and ends up buying one for $250.

b. It costs Cornet Cafe about 20 cents to produce a cup of coffee, but they sell it at 2 dollars and a half because they are the only fancy bar in the neighborhood, so people will buy it anyway.

c. A firm tries to advertise its product in a way that makes it seem different from similar products produced by other firms.

d. Micromax, an Indian cell phone company, produces essentially the same type of phone as Samsung does but at half the cost.

e. A car manufacturing company, attempting to set up a manufacturing plant, lobbies the state and acquires land at a subsidized rate.

f. Mark Rossi, owner of a gas station on an interstate highway, must sell gasoline at the price that just repays his production costs (included a wage he pays to himself), because there are many other gasoline stations around. If he increased the price, no driver would stop there anymore.

Explanation / Answer

Ans: b. - It costs Cornet Cafe about 20 cents to produce a cup of coffee, but they sell it at 2 dollars and a half because they are the only fancy bar in the neighborhood, so people will buy it anyway.

Rent seeking behavior is when an organization, company or individual use resource provided by company, organization or individual to earn monetary gain regardless of how they can benefit or contribute to society in any way in that earning activity.

Cornet cafe could have been used the 20 cent cup to cost lesser money for the people of neighborhood and it will benefitted people around it to spend less money on coffee than others instead for just sake of their monetary gain from their business they sold it at $2.5. In this case Cornet café can benefitted society but they instead went to have extra money gain.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.