What happens in the long run if firms in a monopolistically competitive industry are incurring economic losses? Explain
What will be an ideal response?
If firms in a monopolistically competitive industry are incurring economic losses, firms will exit the market. As firms exit, the demand curve facing each remaining firm begins to shift to the right. This process continues until the remaining firms are no longer incurring losses. The above is also true of perfectly competitive firms as well.
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A minimum wage law prohibits employers from paying workers less than a specified hourly wage. If the minimum wage is above the equilibrium wage:
A. there will be an excess demand for labor. B. there will be an excess supply of labor. C. employment levels will not fall. D. it creates a price ceiling.
In understanding and analyzing "market supply," we focus on how much all firms
A. will supply in the future at various prices. B. want to supply at a given price. C. are willing and able to supply at different prices. D. have sold in the recent past at various prices.
What does the idea of a trade-off between inflation and unemployment mean?
(a) That lower inflation could be established but only at the cost of higher unemployment (b) That lower unemployment could be achieved but only at the cost of more government spending (c) That lower inflation could be established but only at the cost of lower unemployment (d) That lower unemployment could be achieved but only at the cost of lower inflation rates
An increase in the price of a resource will cause a rightward shift of its supply curve
a. True b. False