The Solo Coal Mine is the only employer in the small town of Way out there. The market supply of coal miners is Qs = 0.02W - 400 and Qd = 500 - 0.02W, where W is the annual wage of a coal miner and Q is the number of coal miners. What wage must be paid at the profit maximizing quantity of coal miners?
A. $23,333
B. $16,670
C. $13,336
D. $21,667
D. $21,667
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You explain to your friend Haslina, who runs a catering service called "Meals in a Zip," about an economic theory which asserts that consumers will purchase less of a product at higher prices than they will at lower prices
She contends that the theory is incorrect because over the past two years she has raised the price of her catered meals and yet has seen a brisk increase in sales. How would you respond to Haslina? A) Haslina is making the mistake of assuming that correlation implies causation. B) I will explain to her that there are some omitted variables that have contributed to an increase in her sales such as changes in income. C) I will explain to her that she is making the error of reverse causality: it is the increase in demand that has enabled her to raise her prices. D) Haslina is right; she has evidence to back her claim. The theory must be erroneous.
A new technology that increases the productivity of teachers has what effect on the labor market for teachers?
a. The wage rate will rise, and quantity of teachers employed will fall. b. The wage rate will rise, and quantity of teachers employed will rise. c. The wage rate will fall, and quantity of teachers employed will fall. d. The wage rate will fall, and quantity of teachers employed will rise. e. There is not enough information to determine what effects there are, if any.
Unions are often able to sustain wages above the equilibrium wage because they can threaten to
Inflation is problematic if
a. it is less than the percentage increase in nominal income. b. it is less than the nominal return on saving. c. it equals the growth rate of real GDP in the long run. d. it distorts relative prices, causing a misallocation of resources.