If a new computer program was developed that dramatically improved productivity in most firms, what would happen in the labor market?
a. The real wage would not change but employment would decrease.
b. The real wage would increase and employment would decrease.
c. The real wage would decrease and so would employment.
d. The real wage would decrease and employment would increase.
e. The real wage would increase and so would employment.
E
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Peter's Pencils is a perfectly competitive company producing pencils. Suppose Peter is producing 1,000 pencils an hour. If the total cost of 1,000 pencils is $500, the market price per pencil is $2, and the marginal cost is $2, then Peter
A) makes an economic profit because marginal revenue is equal to marginal cost at this output level. B) should decrease his output to increase his profit. C) is maximizing his profit and is making an economic profit. D) should increase his output to increase his profit. E) is not maximizing his profit but is making zero economic profit anyway.
Life insurance companies, because of the __________-term nature of their liabilities, prefer to hold __________-term assets
A) long; long B) long; short C) short; long D) short; short
In many rural areas, electric generation and distribution utilities were initially set up as cooperatives in which the electricity customers were member-owners. Like most cooperatives, the objective of these firms was to:
A) maximize profits for the member-owners. B) maximize total revenue that could be redistributed to the member-owners. C) operate at zero profit in order to provide low electricity prices for the member-owners. D) minimize the costs of production.
If demand falls and supply falls, equilibrium price will _____ and equilibrium quantity will _____.
Fill in the blank(s) with the appropriate word(s).