The above figure illustrates the case of a monopsony in the labor market. If the current wage paid is W1 and new wage legislation is passed that increases the minimum wage in this market to W2, the firm will
A) hire less labor at the higher wage and, according to the law of demand, moving from point D to B.
B) hire the same amount of labor as before the law was passed because it cannot adjust to wage changes.
C) hire more labor, moving from point C to B.
D) pay a higher wage, moving from point C to A.
C
You might also like to view...
The ________ in a country's GDP during a recession is smaller if wages are ________
A) fall; rigid B) increase; rigid C) fall; flexible D) increase; flexible
When the macroeconomy is doing poorly (as it was in 2009), profits of existing firms decrease, creating an incentive for existing firms to exit unprofitable markets
This in turn makes it more difficult for the remaining firms to mark up price over average or marginal cost. Indicate whether the statement is true or false
The long-run average cost curve
A. is a composite of short-run AC curves. B. shows the lowest possible short-run AC corresponding to each output level. C. depends on the firm’s planning horizon. D. All of the responses are correct.
Producer surplus refers to
a. the difference between the market price for a good and the minimum price the producer would accept b. the difference between the market price for a good and the maximum price a consumer would be willing to pay c. the excess supply a firm produces for the market d. the profit a producers receives for a good e. the difference between consumer surplus and the price of the good