Assume the average salary for a college philosophy professor is $50,000 . Suppose businesses decide they need in-house instructors to teach ethics to employees, and they begin hiring philosophy professors at a salary of $75,000 . What are the short-term and long-term effects of this supposition?
As philosophy professors move into the corporate world, colleges would find that they need to increase salaries to maintain an adequate staff of these professors. Over the long term, more people would choose this profession as a career, and an increasing supply would ease the upward pressure on wages. Note that this answer assumes salary is the only factor that matters. In reality, we would need to consider benefits packages, job prestige, the type of work involved, etc. These issues are addressed in the next chapter.
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The gap between potential GDP and real GDP had been as large as 7 percent during the worst of the 2007-2009 recession. By 2015, the gap
A) was positive, with real GDP exceeding potential GDP. B) had been eliminated. C) was still nearly 3 percent. D) remained at 7 percent.
The attainable production points on a production possibilities curve are
A) the horizontal and vertical intercepts. B) the points outside the area enclosed by the production possibilities frontier. C) the points along the production possibilities frontier. D) the points along and inside the production possibility frontier.
Why is there no long-run trade-off between unemployment and inflation?
What will be an ideal response?
As output increases, a typical firm's unit costs
a. decrease because the firm buys its inputs in large quantities b. increase because the supply of inputs increases c. remain constant d. increase due to the increasing scarcity of resources e. decrease as firms take advantage of diseconomies of scale