"Other things being equal, the monopolist hires fewer workers than would be hired than a perfectly competitive industry." Do you agree or disagree? Why?
What will be an ideal response?
Agree. For competitive firms, marginal revenue product equals marginal physical product multiplied by product price. For a monopoly, marginal revenue product equals marginal physical product multiplied by marginal revenue. Since marginal revenue falls faster than price, MRP of a monopolist falls faster than the price in a competitive industry. Marginal factor cost is the same for both, so the equilibrium quantity of labor is less for monopoly than for perfect competition.
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Which of the following is an accurate description of the U.S. inflation rate since 1950?
a. The rate has always been below 4 percent. b. Inflation was low in the 1970s. c. Episodes of high inflation occurred in the 1970s and early 1980s. d. Inflation rates were very high in the 1960s. e. Episodes of high inflation occurred in the 1990s.
If total utility is positive, marginal utility must also be positive
Indicate whether the statement is true or false
As a result of a labeling mistake at the chemical factory, a farmer accidentally sprays weedkiller rather than fertilizer on half her land. As a result, she loses half of her productive farmland. If the property of diminishing returns applies to all factors of production, she should expect to see the marginal productivity of her remaining land
a. increase. b. remain unchanged. c. decrease but remain positive. d. decrease and become negative.
If the MPP of an additional unit of labor is 4 units per hour, product price is constant at $5 per unit, and the wage rate is $19 per hour, then
A. The employer should lower wages and accept less employment of labor. B. The additional unit of labor should be employed. C. Product price must be reduced if profits are to be made. D. The additional unit of labor should not be employed because it costs more than it is worth.