In a perfectly competitive labor market, the wage rate paid by the individual firm is
A) the equilibrium market wage rate.
B) dependent on the demand for the product.
C) below the equilibrium market wage rate.
D) a function of the tax system.
Answer: A
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A monopolist faces a demand curve given by P = 60 -2Q and has total costs given by TC = Q2. Its marginal revenue is MR = 60 - 4Q and its marginal cost is MC = 2Q. In autarky, what is the firm's equilibrium output?
a. 5 b. 10 c. 15 d. 20
Refer to the figure below. If negotiation is impractical, the socially optimal level of production can be achieved by:
A. imposing a tax on paper equal to the external cost. B. subsidizing paper by the amount of the the external benefit. C. compensating those injured by the externality. D. banning production of paper.
Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the short run would be:
A. P1 and Y2. B. P2 and Y3. C. P3 and Y1. D. P2 and Y2.
You are a manager in a perfectly competitive market. The price in your market is $14. Your total cost curve is C(Q) = 10 + 4Q + 0.5Q2. What level of profits will you make in the short run?
A. $40 B. $80 C. $20 D. $60