Explain why featherbedding may or may not increase the demand for labor.
What will be an ideal response?
When firms are forced to use more labor per unit of output, their production costs are likely to increase, resulting in higher prices for their products. If consumers respond to higher prices by purchasing noticeably less output, the total employment may actually decrease.
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If a public good is financed through Lindahl prices, those whose total willingness to pay for the public good is high will end up paying a higher Lindahl price than those whose total willingness to pay for the public good is low.
Answer the following statement true (T) or false (F)
If a firm buys a building so as to have office space for its workers, the monthly opportunity cost of the building is best measured as
A) the monthly mortgage payment the firm must pay. B) the price the firm paid divided by twelve. C) zero. D) the rent the firm could earn if it rented the building to another firm.
The portion of a resource's earnings greater than the amount required to keep the resource in its present use is called:
a. the price of the resource. b. the opportunity cost of the resource. c. economic rent. d. income.
The equilibrium price of a good or service is the price
a. at which the current quantity supplied by producers is equal to the potential output. b. fixed by the government so that producers do not over produce and consumers do not over purchase. c. at which all consumers can afford to purchase units of a good or service as long as they provide them with any value. d. at which the quantity supplied by producers is equal to the quantity demanded by consumers.