Explain why a monopsonist's marginal labor cost curve must lie above its labor supply curve
The labor supply curve shows the wage rate needed to hire each additional unit of labor. For a
monopsonist, when it offers higher wages to attract additional units of labor, it must also pay the higher
wage to all other workers. Therefore, the change in total labor cost rises even faster than the wage rate, and
hence the MLC curve will lie above the labor supply curve.
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Cans of soup purchased by supermarkets but not sold to individuals in the current period
A) are considered intermediate goods, yet still count in the GDP. B) are considered intermediate goods, thus do not count in the GDP. C) are considered investment goods and do count in the GDP. D) are considered investment goods and thus do not count in the GDP. E) are considered consumption goods but do not yet count in the GDP.
All of the following are roles of a exchange EXCEPT
A) instituting margin requirements on futures contracts. B) marking to market at the end of each day. C) eliminate the need for buyers and sellers of futures contracts to be concerned about the creditworthiness of each other. D) reducing the default risk involving forward contracts.
Last year the Jones family earned $40,000 . This year their income is $42,000 . In an economy with an inflation rate of 10 percent, which of the following is correct?
a. The Jones' nominal income and real income have both fallen. b. The Jones' nominal income and real income have both risen. c. The Jones' nominal income has increased and their real income has fallen. d. The Jones' nominal income has decreased and their real income has risen.
Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Lavaland can produce 36 units of food per year or 18 units of clothing. Which of the following is true? a. Iceland has both a comparative and absolute advantage in producing food
b. Iceland has a comparative advantage, but not an absolute advantage in producing food. c. Lavaland has both a comparative and absolute advantage in producing clothing. d. Lavaland has an absolute advantage, but not a comparative advantage in producing clothing.