Hank's Propane Storage Company is a profit-maximizing monopsony in the local labor market for propane handling, delivery, and other associated services. The supply and marginal cost of labor curves are shown in the figure above
Hank's demand for labor curve is the curve labeled VMP = D. At what level should a minimum wage be set in order to achieve the wage rate and quantity of employment that would be attained in a competitive labor market? A) $4 per hour
B) $6 per hour
C) $8 per hour
D) $12 per hour
C
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To achieve allocative efficiency, firms
a. strive to minimize fixed costs b. strive to maximize profits c. produce at their minimum long-run average cost d. produce at their minimum long-run marginal cost e. produce the output consumers want most
When Mexico's exchange rate depreciated dramatically in 1994,
a. American exports to Mexico increased b. American exports to Mexico declined c. Mexican tourism to the U.S. increased d. American tourism to Mexico decreased e. Mexicans received more dollars for their peso