The efficiency wage model contains the assumption that labor productivity __________ the wage rate, so that a firm maximizing its profits __________ pay workers an above-market wage rate
A) is independent of; may
B) is independent of; will never
C) depends on; may
D) depends on; will never
C
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Rational expectations theory is based on the assumption that when individuals in the economy are forming expectations, they
A) use all available information. B) use past evidence only. C) consistently make the same errors. D) pay no attention to past information.
The figure above shows the demand and cost curves for a single-price monopoly. The firm will produce ________ units and set a price of ________ per unit
A) 15; $20 B) 10; $20 C) 10; $30 D) None of the above answers is correct.
Think about each of the items in the list and explain how they affect incen-tives and might change the choices that people make:
What will be an ideal response?
Imposing taxes in markets where demand and supply are price inelastic:
A. causes less inefficiency than imposing them in price-elastic markets. B. causes more inefficiency than imposing them in price-elastic markets. C. causes no inefficiency. D. cause the same amount of inefficiency because efficiency is unrelated to market elasticity.