If a monopolist in the output market purchases its monopoly supplier of labor, consumers benefit
What will be an ideal response?
True. The firm now pays a competitive price for its labor instead of the monopoly price. This lower wage shifts the firm's marginal cost curve downward. The result is a lower price charged to consumers.
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What happens to total revenue if price increases and demand is inelastic? Why?
What will be an ideal response?
Firms should hire additional units of a resource as long as the:
A. marginal product of the resource exceeds the price of the resource multiplied by the quantity of output produced. B. marginal product of the resource is less than the price of the resource. C. price of the output produced is positive. D. marginal revenue product of the resource exceeds the cost of an additional unit of the resource.
Which is NOT a reason that an aggregate supply curve might slope upward to the right?
A. As production increases, people want to buy less. B. As production increases, wages are bid up. C. As production increases, interest rates rise. D. As prices rise, producers expand output.
If you accept the rational expectations hypothesis as accurate, what would you tell monetary policy makers who ask you how to more effectively manage the economy?
A. Only unanticipated policies will be effective once individuals understand how monetary policy works. B. Individuals base their economic expectations solely on current information, so repeating policy decisions that have worked in the past is the most effective path to take. C. Individuals do understand how monetary policy works, so consistency and predictability are the keys to effective policy making. D. Consumers do not understand the workings of monetary policy, so discretionary and nondiscretionary policies are equally effective.