The wage rate that a monopsonist would find most profitable is the wage
A. On the labor supply curve corresponding to the level of employment at which the marginal factor cost curve (for labor) intersects the labor demand curve.
B. On the labor demand curve at the wage where the marginal factor cost curve intersects the demand curve for labor.
C. At the intersection of the marginal wage curve and the marginal cost curve.
D. On the labor demand curve corresponding to the level of employment at which the marginal factor cost equals market supply.
Answer: A
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A key aspect of the principal-agent problem is that
A) the principal cannot perfectly monitor the agent's actions. B) the principal can perfectly monitor the agent's actions. C) the output level does not depend on the agent's actions. D) the principal is always risk-averse.
Perfect price discrimination occurs when:
a. each customer is charged the maximum price that each is willing and able to pay. b. two classes of customers are charged different prices as they have the same elasticities of demand. c. senior citizens are offered restaurant discounts. d. the firm sets MR < MC for each class of customers. e. the firm charges same price to different customers so that it is equal to the equilibrium price.