Why is the short-run demand curve for labor downward sloping?
What will be an ideal response?
The firm will pay another unit of labor as much as the amount that the firm benefits from having another unit of labor. In a competitive market this amount is equal to P ? MP. As more labor is hired, MP declines. Thus, since the value of the marginal unit of labor declines as more labor is hired, the demand curve is downward sloping.
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Quantity demanded is affected not just by price but by other variables, such as income and the prices of other goods.
Answer the following statement true (T) or false (F)
Relative to the case in which two identical firms choose quantities simultaneously in a Cournot model, if one of the two moves first and is observed by the other, how would this affect its output?
a. it would increase its output, more so if it could deter the other from entering the market at all. b. it would increase its output, but would moderate this increase if it were concerned about entry deterrence. c. it would decrease its output if it couldn't deter entry and increase it otherwise. d. it would decrease its output whether or not it wanted to deter entry.
If consumption spending is larger than disposable income,
a. saving is positive. b. dissaving occurs. c. saving is exactly zero. d. a depression results. e. this cannot occur.
A depreciation in the value of the U.S. dollar would:
a. encourage foreigners to travel on American owned airlines. b. make U.S. goods more expensive to foreign consumers. c. decrease the number of dollars it takes to buy a Swiss franc. d. make it more expensive for U.S. citizens to travel abroad.