What does it mean for a firm to be a price taker in the labor market?
What will be an ideal response?
A price taker in the labor market can hire as many workers as it wants without having to offer a higher wage. The supply curve of labor faced by the individual firm is horizontal at the market wage.
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An economy has two workers, Jen and Rich. Everyday they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the opportunity cost for Jen to produce one radio?
A. 1/5 TV B. 10 TVs C. 5 TVs D. 1/10 TV
If the price of a good rises, supply will
A. increase. B. decrease. C. not change. D. the answer depends upon the demand in the market.
Which of the following is a prominent solution to adverse selection in used-car markets?
A) An imposition of a tax on the sale of each unit in the used-car market B) The imposition of a price ceiling in the used-car market C) The imposition of a price floor in the used-car market D) Third-party certification of used cars
In practice, the Board of Governors and FOMC typically defer to the policy proposals of the:
A) President B) Chair of the Fed C) Secretary of Treasury D) Speaker of the House