Assume that the market-clearing wages are $10 per hour in a safe job and $18 per hour in a risky job. Then, at the completion of a war, many ex-soldiers who enjoy risky ventures enter the labor market. Which of the following is not a likely outcome of this change?
A. The wage differential will decrease.
B. The wage associated with risky jobs will decrease.
C. The number of people working risky jobs will increase.
D. Many firms that currently offer risky jobs will begin offering safe jobs.
E. The fraction of people working safe jobs will decrease.
Answer: D
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Pizza at Home is a frozen pizza company that supplies several large grocery store chains. The managers of Pizza at Home are currently negotiating a four year contract with Saucy Pizza, a manufacturer of pizza sauce. Saucy Pizza will supply a specified quantity of canned tomato sauce to Pizza at Home over a four year period; however; Pizza at Home can ends its contract with Saucy Pizza at the end
of the first, second, or third years if Saucy Pizza does not supply quality tomato sauce. What can the manager of Pizza at Home do to avoid the end-game problem? A) Pay Saucy Pizza in full at the end of the third year. B) Offer to renew the contract with Saucy Pizza if they provide quality tomato sauce in all four years. C) Pay Saucy Pizza in equal installments at the end of each of the four years. D) Pay Saucy Pizza in installments at the end of the first, second, and third years.
One reason why the smaller oligopolistic firms accept godfather pricing in unbalanced oligopoly is because they can
a. differentiate their products more fully in order to increase market power b. engage in mergers if the godfather chooses the wrong price c. together influence the price leader (godfather firm) to share industry profit more equally d. enjoy a higher economic profit than they would otherwise e. survive a price war without too many losses
Which of the following groups would most likely be harmed by inflation?
a. workers b. borrowers c. debtors d. retirees
Comparative advantage indicates that:
A. specialization and exchange will permit trading partners to maximize their joint consumption. B. a nation can gain from trade only if it is not at an absolute disadvantage in producing all goods. C. a nation can gain from trade only when its trading partners are not low-wage countries. D. countries should export products for which they are high-opportunity cost producers.