In the monopolistic competition model, the attribute of free entry suggests that:
a. all firms earn zero economic profits in the long run
b. some firms will be able to earn economic profits in the long run.
c. some firms will be forced to incur economic losses in the long run.
d. the market structure will eventually be characterized by perfect competition in the long run.
a
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Suppose the federal government allows labor unions to act as the sole seller in labor markets, but the government collects a $1 per hour fee to cover unemployment insurance for each union worker
Assuming this fee is not so large that it forces the unions to disband, what is the impact of this fee on the equilibrium wage and employment level in the monopolized labor market? A) After-tax wages and employment decline. B) After-tax wages increase and employment declines. C) Employment increases and after-tax wages decline. D) No change in after-tax wages or employment levels.
In a competitive price-taker market,
a. many other sellers are offering a product that is essentially identical. b. consumers have more influence over the market price than producers do. c. government intervention prevents firms from influencing price. d. producers agree not to change the price.