Consider two situations: In situation A the production of widgets is monopolized by a single firm. In situation B the production of widgets is perfectly competitive. In both situations the supply of labor to widget makers is infinitely elastic at a wage of w. Which of the following statements is true?
a. The marginal value product of labor will be the same in the two cases.
b. The marginal value product of labor is higher in case B than in case A.
c. The marginal value product of labor is higher in case A than in case B.
d. From the information given it is not possible to make a definite statement about the marginal value product of labor.
c
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Suppose your accountant told you that the $50,000 you made last year was your normal profit. When you asked him what your accounting profit was he replied that it was precisely the same as your normal profit. You wouldn't have to ask what your economic profit was because you know it must be
a. 0 b. $50,000 c. $100,000 d. $50,000 loss e. $100,000 loss
If Maria spends a fixed dollar amount per week on movie rentals regardless of changes in the price, Maria's demand for movie rental can be considered:
A. elastic. B. unit elastic. C. inelastic. D. There is not sufficient information to determine the price elasticity.
Consider a monopoly who posts an economic profit of $10,000,000. All else equal, this monopolist should expect
A) entry into its market, prices to fall, profits to fall. B) no entry into its market, prices to remain the same, profits to remain the same. C) exit from its market, prices to rise, profits to rise. D) entry into its market, the need to increase price, profits to remain the same.
According to the misperceptions theory, the amount by which producers increase their output when the general price level rises depends on
A. the slope of the aggregate demand curve. B. the slope of the long-run aggregate supply curve. C. how much they think their relative prices have increased. D. the size of the Solow residual.