Suppose a firm finds that it must raise wages for all of its workers every time it tries to expand its workforce. This means
A. The marginal factor cost curve is below the average cost of labor curve.
B. The firm has market power.
C. The labor market is perfectly competitive.
D. It will produce more than it would in a competitive labor market.
Answer: B
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"By producing at an output rate at which marginal revenue equals marginal cost, a firm is definitely making positive economic profits." Do you agree or disagree? Why?
What will be an ideal response?
In the short run, monopolistically competitive firms behave like ________________, but in the long run, the profit of a firm is similar to that of ________________.
A. monopolies; perfectly competitive firms B. perfectly competitive firms; monopolies C. monopolies; oligopolies D. oligopolies; perfectly competitive firms
To produce 100 bushels of wheat, Farmer A requires fewer inputs than does Farmer B. We can conclude that Farmer A has an absolute advantage over Farmer B in producing wheat
a. True b. False Indicate whether the statement is true or false
Suppose that there is a temporary, but significant, increase in oil prices in an economy with an upward-sloping SRAS curve.
a. If policymakers wish to prevent the equilibrium price level from changing in response to the oil price increase, should they increase or decrease the quantity of money in circulation? Why? b. If policy makers wish to prevent equilibrium real GDP from changing in response to the oil price increase should they increase or decrease the quantity of money in circulation? Why? c. Can policymakers stabilize both the price level and real GDP simultaneously in response to a short-lived but sudden rise in oil prices? Explain briefly.