We say that the demand for labor is a derived demand because:
A. labor is a necessary input in the production of every good or service.
B. we demand the product that labor helps produce rather than labor service per se.
C. the forces of supply and demand do not apply directly to labor markets.
D. labor is hired using the MRP = MRC rule.
Answer: B
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There is no role for government in a free enterprise economy such as the United States.
Answer the following statement true (T) or false (F)
An efficiency wage premium serves the same function as a bond because, just as with a bond, the premium represents
A) the amount the employee loses if caught shirking. B) the expected value of the amount the employee loses if he shirks. C) the cost of monitoring the employee. D) the gain to the employee if he shirks.
An unplanned economy operating under laissez faire
a. allocates resources by market supply and demand. b. cannot respond to basic questions about production and distribution. c. shows breakdowns with frequent surpluses and shortages. d. allocates goods and services under government subsidy.
Pure monopoly
a. is defined as having only one supplier. b. has no close substitutes for its product. c. exists when entry and survival of potential competitors is extremely unlikely. d. All of the above are correct.