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Economics (AS & A Level) · Oct / Nov 2021 · Paper 32 · Question 16

9708Labour market forces and government intervention

What happens to economic rent and transfer earnings if the supply of labour becomes perfectly inelastic?

  1. Aeconomic rent decreases; transfer earnings increase
  2. Beconomic rent decreases; transfer earnings stay the same
  3. Ceconomic rent increases; transfer earnings decrease
  4. Deconomic rent stays the same; transfer earnings decrease

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Correct answer: C. economic rent increases; transfer earnings decrease

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