If a firm has market power in the output market but buys labor in a competitive market, it will hire the same quantity of labor that a competitive firm will
Indicate whether the statement is true or false
False. Since the firm has market power, it must lower price if it wishes to sell more. It will wish to sell fewer units than a competitive firm, and, therefore, hire less labor than a competitive firm does.
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Which of the following results in an increase in the supply of a good or service?
A) a rise in the price of the good or service B) an increase in foreign imports of the good or service C) a fall in the price of the good or service D) a smaller number of sellers producing the good or service E) higher taxes imposed upon producers of the good or service
If the cross-price elasticity of demand is -3, then the goods are __________ and the consumers' responsiveness would be characterized as __________
a. substitutes; inelastic b. substitutes; elastic c. substitutes; unit elastic d. complements; inelastic e. complements; elastic
To maximize profit, a perfectly competitive firm that decides not to shut down will choose the rate of output at which
a. price is highest b. price minus average total cost is maximized c. price equals marginal cost d. total revenue is maximized e. average total cost is minimized
The consumption function has two components: (1) autonomous consumption and (2)
a. fixed consumption b. consumption that varies with income c. transitory consumption d. permanent consumption e. consumption that varies with saving