We would expect that a fall in labor supply will have a proportionately smaller effect on the market wage rate when
A) workers can easily be replaced by capital goods.
B) the product produced in the industry has very few substitutes.
C) the product is produced in a perfectly competitive industry.
D) labor represents a relatively small portion of total costs.
Answer: A
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Which of the following statements is normative?
A. Large budget deficits should be avoided. B. When the Federal Reserve increases the money supply, interest rates decrease. C. High taxes tend to decrease saving. D. A large budget surplus is likely to lower interest rates.
Social costs are
A) costs that are borne by the government. B) the full cost borne by society whenever a resource use occurs. C) borne by individuals who incur them. D) another term for external costs.
The long-run aggregate supply curve intersects the horizontal axis at the:
A. actual rate of inflation. B. potential level of output. C. expected rate of inflation. D. current level of output.
A natural monopolist that sets prices equal to marginal cost will:
A. incur losses. B. earn zero accounting profits. C. be inefficient. D. set a price greater than average total costs.