A firm's inventory piled up during a recession. How will its labor demand be affected when its excess inventory gets sold off eventually?
What will be an ideal response?
The firm will increase its production after its excess inventory gets sold off after the recession. An increase in production will lead to an increase in its demand for labor. As a result, the firm's labor demand curve will shift to the right.
You might also like to view...
Economic agents can raise money capital by ________
A) issuing liabilities B) repaying a loan C) paying taxes D) providing a subsidy
Double markup problems arise when
a. upstream firms have market power b. downstream firms have no market power c. upstream and downstream products are unrelated in demand d. upstream and downstream firm's pricing decisions tend to increase the demand for the other product
Valeria is a closed economy, where consumption totals $3 billion, tax payments are $300 million, government spending is $1 billion, and GDP is $5 billion. Private saving amounts to
a. $1.7 billion and Valeria's government runs a budget deficit. b. $1.7 billion and Valeria's government runs a budget surplus. c. $1 billion and Valeria's government runs a budget deficit. d. $1 billion and Valeria's government runs a budget surplus
Suppose that production for good X is characterized by the following production function, Q = K0.5L0.5, where K is the fixed input in the short run. If the per-unit rental rate of capital, r, is $15 and the per-unit wage, w, is $5, then the average fixed cost of using 16 units of capital and 25 units of labor is:
A. $9. B. $56. C. $12. D. There is insufficient information to determine the average fixed costs.