What does a monopolist's demand curve for labor look like? How does it compare to the market demand curve for a competitive industry? Assuming the monopoly purchases factors of production in a perfectly competitive market, what does the supply curve of labor to a monopolist look like? Explain.
What will be an ideal response?
The demand curve for labor for a monopoly is downward sloping because of the law of diminishing marginal product. The marginal revenue product curve falls faster in the case of monopoly than in perfect competition because marginal revenue falls faster than price falls as more units are sold. So, the monopoly will tend to hire fewer workers than if the industry was competitive. This is consistent with the fact that monopolies restrict output. The supply curve facing a monopoly is horizontal because the monopoly is still a price taker in input markets.
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The economy pictured in the figure below has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; B B. recessionary; C C. recessionary; A D. expansionary; A
The country of Pimm exports $500 billion worth of goods and services and imports $400 billion worth of goods and services. Net interest income paid abroad is $50 billion and net transfers are $0. The current account balance is ________
A) $50 billion B) $100 billion C) $150 billion D) $975 billion
A fall in import prices or an increase in productivity ________
A) constitute a positive supply shock B) typically leads to a rise in commodity prices C) typically comes with a reduction in output D) all of the above E) none of the above
Which of the following is an example of market failure?
a. Public goods. b. Externalities. c. Lack of competition. d. all of these.