Why does a monopsonist's marginal expenditure curve lie above the labor supply curve?
What will be an ideal response?
To hire additional labor, the monopsonist must increase the wage paid to all units of labor. Thus the marginal expenditure of the next unit of labor is the higher wage plus the wage increase paid to all previously hired labor.
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Net interest payments by the government are usually
A) small and sometimes negative for both the federal, and state and local governments. B) small and sometimes negative for the federal government, but large and positive for state and local governments. C) small and sometimes negative for state and local governments, but large and positive for the federal government. D) large and positive for both the federal, and state and local governments.
Time to maturity refers to the amount of time until
A) an asset repays the principal to an investor. B) an asset pays interest for the first time. C) a bond can be sold on the secondary market. D) the yield curve shows an upward slope.
The price of a financial asset should equal the
A) present value of the payments to be received from owning the asset. B) future value of the payments to be received from owning the asset. C) face value of the asset less the future payments to be received from owning the asset. D) coupon value of the asset divided by the effective interest rate at the time the asset was purchased.
When there is market failure due to a negative externality,
a. innocent people will suffer since it cannot be corrected. b. setting price equal to marginal social cost will solve it. c. the free market produces too little output. d. externalities have been taken into account. e. the best solution eliminates the externality entirely.