Explain why a monopsonist's marginal factor cost curve must lie above its labor supply curve.
What will be an ideal response?
The labor supply curve shows the wage rate to be paid in order 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 average wage rate, and hence the MFC curve will lie above the labor supply curve.
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Economists use models in order to
A. get around having to deal with actual facts. B. understand real-life events and predict outcomes. C. avoid having to use theories to understand economic conditions. D. help elect political candidates.
The main factor that explains the difference between accounting cost and economic cost is
A) opportunity cost. B) fixed cost. C) variable cost. D) All of the above help to explain the difference.
What does the slope of a budget constraint represent?
The savings rate in Josiane’s country has been very low for many years. Describe how this has likely impacted the country’s growth rate. Provide brief examples.
What will be an ideal response?