Suppose n identical Cournot firms purchase labor in a competitive labor market. How is the market demand for labor affected by the number of firms in the market?
What will be an ideal response?
Each firm chooses a quantity of labor demanded such that w = p(1 + 1/n?) MPL. As n increases, the demand for labor curve from the individual firm shifts leftward. With the increase in the number of firms, however, market demand shifts rightward.
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A monopoly creates a deadweight loss because the monopoly
A) sets a price that is too low. B) makes a normal profit. C) does not maximize profit. D) produces less than the efficient quantity. E) produces more than the efficient quantity.
Because pollution reduces economic welfare, on this count real GDP as measured
A) decreases as pollution increases. B) increases to take into account the expenditures that will be made in the future to clean up the pollution. C) overstates economic welfare. D) understates economic welfare.
In long-run macroeconomic equilibrium
A) real GDP equals potential GDP. B) the price level is fixed and aggregate demand determines real GDP. C) real GDP and the price level are determined by short-run aggregate supply and aggregate demand and long-run aggregate supply is irrelevant. D) real GDP is less than potential GDP.
Refer to the table below. If Fresh Laundry is currently producing 8 quality units, to maximize profit, Fresh Laundry should ________ the number of quality units as the current quality marginal revenue is ________ its marginal cost.
Fresh Laundry is a firm that produces laundry detergent. The table above summarizes Fresh Laundry's product quality marginal revenue and marginal cost at various quality levels.
A) increase; less than
B) maintain; greater than
C) increase; equal to
D) maintain; equal to