The assumption that a firm operates in a competitive labor market means that the firm
A. does not use capital in the production process.
B. offers a real wage rate that is indexed for inflation.
C. faces an upward-sloped marginal cost of labor curve.
D. faces a downward-sloped marginal cost of labor curve.
E. faces a constant wage regardless of how much labor it employs.
Answer: E
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The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in purchasing power as a result of the price change
Indicate whether the statement is true or false
Managers at Concord Construction have determined that the firm’s revenues do not cover the firm’s average variable costs. Which term describes the situation at Concord Construction?
a. The shutdown point b. Allocative inefficiency c. Diseconomies of scale d. The price taking point
The incentive problem under communist central planning refers to the idea that:
A. planners had to direct required inputs to each enterprise. B. workers, managers, and entrepreneurs could not personally gain by responding to shortages or surpluses or by introducing new and improved products. C. the immediate effect of more investment was less consumption. D. exports had to be equal to imports for a central plan to work.
International capital inflows reduce the power of fiscal policy.
Answer the following statement true (T) or false (F)