What is the price of a unit of labor in a competitive labor market?
What will be an ideal response?
The price of labor in a competitive labor market is the market wage. Competitive firms are price takers in the labor market, which means that they can hire all of the labor they want at the existing market wage.
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"If the money supply rises by $1 billion, GDP will rise until it alone increases the quantity of money demanded by $1 billion." This describes the situation when
A) an IS curve shifts against a horizontal LM curve. B) an IS curve shifts against a vertical LM curve. C) a vertical LM curve shifts against an IS curve. D) a horizontal LM curve shifts against an IS curve.
Explain why when the demand curve for a good is elastic, a one percent reduction in the price of the good will increase a consumer's expenditure on the good
What will be an ideal response?
Price elasticity of demand measures the responsiveness of quantity demanded in a market to a change in price
a. True b. False Indicate whether the statement is true or false
A big problem with fair pricing schemes is that
a. output is lower than if the market were competitive b. prices are higher than if the market were competitive c. firms have no incentive to control costs d. efficiencies result from lack of profit motive e. the marginal cost may not be very low