How is the wage rate determined when a union faces a monopsony?
What will be an ideal response?
When a monopoly seller, such as union, bargains with a monopsony buyer, such as a large firm, the situation is called bilateral monopoly. The wage rate will be lower than the union's monopoly wage rate and higher than the buyer's monopsony wage rate. Within this range, the actual wage rate depends on the cost that each party can inflict on the other. Everything else the same, the more cost that one party can inflict on the other, the closer the actual wage rate will be to that party's desired wage rate.
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A risk-averse individual is offered a gamble that promises a gain of $1000 with probability 0.25 and a loss of $300 with probability 0.75 . Given this situation, he or she will:
a. definitely take the gamble. b. definitely not take the gamble. c. definitely take the gamble if his or her income is high enough. d. take an action that cannot be determined given the information available.
Suppose the government has imposed a price floor on the market for soybeans. Which of the following events could transform the price floor from one that is not binding into one that is binding?
a. Farmers use improved, draught-resistant seeds, which lowers the cost of growing soybeans. b. The number of farmers selling soybeans decreases. c. Consumers' income increases, and soybeans are a normal good. d. The number of consumers buying soybeans increases.
Net domestic product is the total value of
A) all final goods and services produced within a country's borders in a year. B) only intermediate goods produced within a country's borders in a year. C) all final goods and services produced within a country's borders in a year minus gross private domestic investment. D) only intermediate goods produced within a country's borders in a year plus gross private domestic investment. E) all final goods and services produced within a country's borders in a year minus capital consumption allowance.
Efficiency wages create a
a. shortage of labor and so reduce unemployment. b. shortage of labor and so raise unemployment. c. surplus of labor and so reduce unemployment. d. surplus of labor and so raise unemployment.