Economic theory would anticipate that labor market distortions would reduce employment. Why isn't there greater evidence of this in developing countries?
What will be an ideal response?
The answer would focus on the imperfection of labor markets even without regulations, so that the impact of those regulations (e.g. the minimum wage) might not reduce employment. Also the ability to evade regulations could be mentioned.
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The shutdown decision can be restated in terms of producer surplus by saying that a firm should produce in the short run as long as
A) revenue exceeds producer surplus. B) producer surplus is positive. C) producer surplus exceeds fixed cost. D) producer surplus exceeds variable cost. E) profit and producer surplus are equal.
The government can act to internalize externalities by taxing goods that have negative externalities and subsidizing goods that have positive externalities
a. True b. False Indicate whether the statement is true or false