Explain the logic behind the First Theorem of Welfare Economics
What will be an ideal response?
A competitive market allows all the voluntary trades desired by people who face the same price. No additional voluntary trades can occur so there is no way to make someone better off. Thus, a competitive equilibrium is efficient.
Economics
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XYZ Co operates in a competitive market. Its production function is q = L?K?. The exponents, ? and ?, are both less than 1. The firm's capital is fixed, and it takes the wage and price as given
Derive the firm's short-run demand for labor as a function of K, w, and p. How does the firm react to an increase in the wage rate?
Economics
Why does a monopsonist's marginal expenditure curve lie above the labor supply curve?
What will be an ideal response?
Economics