Suppose the wage rate is $5, and the marginal revenue product (MRP) of the seventh worker at a yo-yo factory is also equal to $5. The labor market was originally purely competitive, but is then monopsonized without changing the MRP of the seventh worker. That means:
A. More workers will be hired but they will be paid lower wages
B. More workers will be hired and they will be paid higher wages
C. Fewer workers will be hired and they will be paid lower wages
D. Fewer workers will be hired and they will be paid higher wages
C. Fewer workers will be hired and they will be paid lower wages
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Consumer surplus exists when
A) it costs less to produce goods than buyers must pay for them. B) consumers value the good more highly than what they must pay to buy it. C) taxes on goods are less than the appropriate amount. D) the marginal benefit of the good is always equal to or less than the price of the good. E) the price of the good is greater than the marginal cost of producing a unit of the good.
Is demand more elastic in the short run or the long run? Why?
What will be an ideal response?