Suppose n identical Cournot firms purchase labor in a competitive labor market. How is the market demand for labor affected by the number of firms in the market?
What will be an ideal response?
Each firm chooses a quantity of labor demanded such that w = p(1 + 1/n?) MPL. As n increases, the demand for labor curve from the individual firm shifts leftward. With the increase in the number of firms, however, market demand shifts rightward.
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List and define the two categories of after-tax corporate profits
What will be an ideal response?
A perfectly elastic demand is one in which the:
A. demand curve is perfectly vertical. B. demand curve is perfectly horizontal. C. price elasticity is exactly 1. D. response to a change in price is immediate.
The most common explanation for Social Security payments accounting for a larger share of federal government expenditures is
a. increases in life expectancy. b. people becoming eligible for Social Security benefits at an earlier age. c. increases in birth rates among teenagers and the poor. d. falling payroll tax receipts.
Monopolistic competition is similar to perfect competition in that:
A. firms earn economic profits in the long run B. there are a large number of firms C. firms face downward-sloping demand curves D. both a and b E. all of the above