Assume the firms in a perfectly competitive industry are initially in long-run equilibrium and the cost of labor increases. In the short run, this will cause firms in the industry to:
A) reduce output and incur a loss.
B) reduce output and earn a positive economic profit.
C) increase output and incur a loss.
D) increase output and earn a positive economic profit.
A
Economics
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Explain why the intersection of the best-response functions is the Cournot equilibrium
What will be an ideal response?
Economics
Often economists measure the loss in consumer surplus by looking at the changing area below the Marshallian demand curve. This approach will provide a more accurate measure of the compensating variation of such a price increase if: a. the good occupies a small portion of a person's budget
b. the good occupies a large portion of a person's budget. c. the good has many close substitutes. d. the good has few substitutes.
Economics