Consider an economy in which all labor markets are perfectly competitive, all workers are equally able to do any job, and the nonwage attributes of all jobs are equally attractive to all workers. Which of the following would occur in a labor market where the current wage rate exceeds wage rates in alternate markets?
a. Labor demand will decrease, and the equilibrium wage rate will fall.
b. Labor demand will increase, and the equilibrium wage rate will fall.
c. Labor demand will increase, and the equilibrium wage rate will rise.
d. Labor supply will decrease, and the equilibrium wage rate will rise.
e. Labor supply will increase, and the equilibrium wage rate will fall.
E
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When positive economic profits exist in an industry:
A) the market price of the good produced by the industry is less than the average total cost of the industry. B) resources flow from less productive uses to that particular industry. C) there is an exit of firms from the industry. D) the market price of the good produced by the industry is less than the marginal cost faced by the industry.
Equilibrium GDP on the demand side occurs when total spending
a. equals total production, and inventories are zero. b. equals total production, and firms are unable to adjust inventories. c. exceeds total production, and inventories are rising. d. equals total production, and inventories remain at desired levels. e. is less than total production, and inventories are falling.