Using a graph, compare the labor-market equilibrium under perfect competition and monopsony. Explain.
What will be an ideal response?
Refer to the above figure. Under perfect competition, the wage is Wc with Lc units of labor hired. A monopsony's marginal factor cost curve lies above the supply curve-the monopsony has to increase wages to hire more workers. The monopsonist hires Lm workers-MFC = MRP at this amount of labor. The wage rate is Wm and the monopsonist hires fewer workers and pays a lower wage than in a competitive situation. The difference between the workers' marginal revenue product and the wage is the monopsonistic exploitation of labor.
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In the short run, there are large and persistent deviations between actual exchange rates and exchange rates predicted using purchasing power parity because of:
a. Discretionary fiscal policy. b. Widely different inflation rates in the two nations. c. Very different real GDP growth rates in the two nations. d. Many goods and services in the two nations' price indices are not traded internationally. e. All of the above.
Suppose that a firm operating in perfectly competitive market sells 100 units of output. Its total revenues from the sale are $500 . Which of the following statements is correct? (i) Marginal revenue equals $5. (ii) Average revenue equals $5. (iii) Price equals $5
a. (i) only b. (iii) only c. (i) and (ii) only d. (i), (ii), and (iii)
A year-long drought that destroys most of the summer's crops would be considered a:
A. short-run supply shock. B. long-run demand shock. C. long-run supply shock. D. short-run demand shock.
Which of the following will cause a shift in the demand curve for hoverboards?
A. a change in taste or preference B. a change in income C. a change in wealth D. all of the above