Which of the following is a market imperfection that might explain persistent wage differentials within an occupation?
A. Geographical immobility of workers.
B. Readily available information about job opportunities and pay.
C. Principal-agent problems.
D. Compensating wage differentials.
Answer: A
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Answer the following statement(s) true (T) or false (F)
1. A firm earns a positive economic profit when the market price exceeds its marginal cost. 2. As long as profits remain positive, a firm will want to increase the quantity produced. 3. Only variable costs are relevant to a firm's decision to shut down. 4. When a firm has chosen to shutdown it has exited the industry. 5. A competitive firm will exit the industry in the long run if the price of its product falls below its average cost.
If the forward exchange rate of the yen in terms of dollars is greater than the spot exchange rate,
A) Japanese interest rates must be higher than U.S. interest rates. B) U.S. interest rates must be higher than Japanese interest rates. C) market participants must be expecting the dollar to appreciate against the yen. D) market participants must be expecting the dollar to depreciate against the yen.
Assume that a perfectly competitive constant-cost industry is in long-run equilibrium when market demand suddenly decreases. Which of the following statements is incorrect?
a. Existing firms will start to suffer short-run losses b. Existing firms will shut down in the short run if average variable cost exceeds average revenue at all output levels c. Some firms will leave the industry in the long run d. The market supply curve will shift to the right in the long run e. Any short-run losses will be eliminated in the long run
Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 60 cookies together. What is the average product of the first three workers?
A. 25 cookies B. 30 cookies C. 20 cookies D. 17.5 cookies