"The market demand curve for labor is the horizontal summation of the labor demand curves of all firms." Do you agree or disagree? Why?
What will be an ideal response?
Disagree. A reduction in the wage rate causes each firm to move down their demand curves for labor and hire more workers. Industry output increases, which means product price falls. The fall in the product price causes the individual firm's demand curve for labor to shift to the left. The market demand curve for labor reflects not only the shape of the individual demand curves, but also this shift in the MRP curve.
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Which of the following statements about economic models is TRUE?
A) A good economic model is complex. B) A good model does not rely on any assumptions. C) Every model is based on a set of assumptions. D) Economic models are designed to explain what people need.
If a process is a covariance stationary process, then it will have a finite second moment.
Answer the following statement true (T) or false (F)