In a perfectly competitive labor market, a profit-maximizing firm that is also perfectly competitive in the product market will:
a. face a perfectly inelastic supply curve of labor.
b. pay a wage that is equal to the price of the product.
c. pay a wage that is equal to the marginal product of labor.
d. hire more units of labor than would a firm that sells its output in a monopoly market.
e. pay a wage equal to the marginal factor cost.
e
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In the simple Keynesian model, total savings equals
a. total investment minus the budget deficit. b. total planned and unplanned investment. c. planned investment. d. planned investment plus the budget deficit. e. none of the above.
Which of the following is a good example of efficient specialization and voluntary exchange?
a. A college professor hires someone to rototill a garden for spring planting. b. A college professor works on the engine of a car for a neighbor who is a mechanic. c. A lawyer decides to babysit his young child and agrees to do so for others for cash. d. A physician agrees to help a neighbor work on her income tax return in exchange for her bookkeeping services.
A decrease in the price level
a. increases the quantity of goods and services supplied in the short run. b. decreases the quantity of goods and services supplied in the long run. c. decreases the quantity of goods and services demanded. d. increases the quantity of goods and services demanded.
Related to the Economics in Practice on p. 129: Suppose Store ABC runs an ad claiming to have "low prices everyday." They even demonstrate that the total expenditure for a basket of groceries is less at their store than at any of their competitors. Which of the following statements is not true?
A. You would clearly be better off shopping at Store ABC. B. Even if your preferences are generally consistent with the basket used by Store ABC, it may still be possible for you to substitute other similar goods for those in the basket used by Store ABC (in their example) and thus spend less at another store. C. Your preferences may not be consistent with the basket used by Store ABC (in their example), thus it is not clear whether or not you would be better off shopping at Store ABC or not. D. All of the above statements are true.