If a monopolist in the output market purchases its monopoly supplier of labor, consumers benefit
What will be an ideal response?
True. The firm now pays a competitive price for its labor instead of the monopoly price. This lower wage shifts the firm's marginal cost curve downward. The result is a lower price charged to consumers.
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Which of the following is a way to reduce agency costs?
a. Change the decision maker b. Transferring information to the decision maker c. Change the decision maker's incentives d. All of the above
In the classical model, a basic theoretical feature of self-regulating markets was that
a. unsold inventory and labor unemployment would cause prices and wages to increase. b. lower wages and prices would eliminate unemployment and unsold inventory. c. unsold inventory would never occur. d. an increase in planned saving would cause an increase in the interest rate and a decrease in investment.
If economists are making the assumption that business people try to maximize profits, the best way to determine whether this assumption is useful or not is to
A. find out whether U.S. businesses are more profitable than European businesses. B. see whether it generates accurate predictions about the choices of business people. C. ask business people whether it is true or not. D. take a survey of people and see if they agree with this assumption.
Explain the "shoe-leather" costs of inflation
What will be an ideal response?