Which of the following factors might explain why the long-run equilibrium number of firms can in some instances exceed the socially optimal number?
a. The appropriability effect (the increase in consumers surplus following entry is not "appropriated" by entrants).
b. The feedback effect (an increase in the number of firms increases the competitiveness of the market).
c. The business-stealing effect (entry reduces rival firms' profits, a social loss that entrants do not account for).
d. The ratchet effect (the more profits the entrants earn, the more the stockholders expect them to earn in the future).
c
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Increased immigration is likely to lead to the labor demand curve shifting to the right
Indicate whether the statement is true or false
If a profit-maximizing firm hires an additional unit of labor, what must be true about labor's wage and marginal revenue product?
a. Its wage always equals its marginal revenue product. b. Its wage is always greater than its marginal revenue product. c. Its wage is always total revenue minus marginal revenue product. d. Its wage is always less than or equal to its marginal revenue product.
Bobby makes a New Year's resolution to lose weight. On January 3rd, he decides to go to Ben amp; Jerry's for ice cream instead of going to the gym. Using the concept of revealed preference, economists would most likely conclude that Bobby:
A. has changed his preferences. B. is not a rational individual. C. has no choice over the actions he takes. D. actually gains more utility from ice cream than working out.
Juan and Sophia have decided to stop studying economics and get a bite to eat. Juan wants to go for a pizza and Sophia wants a hamburger. They decide to go for pizza. What can we conclude from this?
A) Juan always gets more utility from pizza than Sophia does. B) Sophia gets less utility from pizza than she could from a hamburger. C) Sophia will get negative utility from the pizza. D) Utility analysis does not work here since Sophia did not eat a hamburger.