When a firm exits a monopolistically competitive market, the individual demand curves faced by all remaining firms in that market will
a. shift in a direction that is unpredictable without further information.
b. shift to the right.
c. shift to the left.
d. remain unchanged. It is the supply curve that will shift.
b
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Moral hazard occurs when a person's behavior changes in a way that
a. is immoral b. is inherently dangerous c. increases the chances of an unfavorable outcome d. increases the likelihood of profit e. raises the net welfare of society
In determining wages, ability, effort, and chance
a. probably play no role whatsoever. b. play a role, but their importance is hard to gauge since ability, effort, and chance are hard to measure. c. play a role, and that role is fully captured in easy-to-measure factors such as human capital and age. d. play a role, and it is fully explained within the context of compensating differentials.