The main difference between a monopsonist and a competitive buyer of labor is that
A) the competitor can hire as many workers as it wants at the going wage while a monopsonist can force wages down when hiring additional workers.
B) the competitor can hire as many workers as it wants at the going wage while a monopsonist must raise wages to hire additional workers.
C) the competitor is a small firm while the monopsonist is a large firm.
D) the competitor is also a competitor in product markets while the monopsonist is also a monopoly in product markets.
Answer: B
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When firms in monopolistic competition incur an economic loss, some firms will
A) enter the industry and produce more products. B) exit the industry, and demand will increase for the firms that remain. C) exit the industry, and demand will decrease for the firms that remain. D) enter the industry, and demand will become more elastic for the original firms. E) exit the industry and other firms will enter.
The CEO of Banner Enterprises adopts a new welfare policy for all employees. The policy states that the company will prevent wages from falling when there is an economic downturn, but the employees should not expect huge salary increases when the economy is strong again. This is an example of _____
a. the efficiency wage theory b. an implicit contract c. a seasonal contract d. an adverse selection
Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on
a. a sharp increase in the demand for gasoline that was brought on by the Vietnam War.
b. the government's policy of maintaining a price ceiling on gasoline.
c. an indifference among U.S. consumers toward conservation.
d. the lack of substitutes for crude oil.
Under monopsony, marginal factor cost is
A. greater than the wage rate. B. below the wage rate but increases as more workers are hired. C. equal to the wage rate. D. downward sloping.