When firms have an incentive to exit a competitive price-taker market, their exit will
a. lower market price.
b. necessarily raise the costs of firms that remain in the market.
c. raise profits for firms that remain in the market.
d. reduce demand for the product.
C
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An implication of the fact that the labor market is perfectly competitive is that:
A) there is always some unemployment. B) the labor demand curve is upward sloping and the labor supply curve is downward sloping. C) the quantity of labor demanded always exceeds the quantity of labor supplied. D) a worker willing to work at the equilibrium wage rate can instantly find work.
In the 1980s, it became increasingly common for consumers to sign two-year leases rather than buying the cars outright. As these leases expired, the supply of used cars expanded considerably. How would the addition of this large volume of off-lease cars influence the possibility of a lemons problem on the used-car market?
a. The lemons problem would be alleviated because off-lease cars tend to be put up for sale automatically, rather than being offered only when the seller obtains private information about the car's poor quality. b. The lemons problem would be worsened because used-car prices would fall in response to the glut of off-lease cars. c. The lemons problem would be worsened because, with more used cars, searching for the appropriate car would become much more difficult for buyers. d. Very little; the existence of off-lease cars has little to do with the lemons problem.
Government policies resulting in reduced efficiency include (i) the welfare system (ii) unemployment insurance (iii) progressive income tax
a. (i) only b. (ii) only c. (i) and (ii) only d. (i), (ii), and (iii)
The income effect of a wage rate increase should lead to
A. a decrease in the quantity of labor supplied and a decrease in leisure. B. an increase in the quantity of labor supplied and an increase in leisure. C. an increase in the quantity of labor supplied and a decrease in leisure. D. a decrease in quantity of labor supplied and an increase in leisure.