Using a graph of the classical labor market, illustrate the effects of a real wage existing in the market that is lower than the equilibrium real wage. What will eventually happen in this labor market if it is perfectly competitive?
What will be an ideal response?
If the real wage is lower than the equilibrium real wage then the quality of labor demanded is greater than the quantity of labor supplied. In the auction for labor, the real wage being paid to labor will eventually be bid up, increasing quantity supplied and reducing quantity demanded until the market is in equilibrium.
Economics
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Use a figure to illustrate the ineffectiveness of monetary policy to spur on an economy under a fixed exchange rate
What will be an ideal response?
Economics
In the long run:
A. all costs are variable costs. B. all costs are fixed costs. C. variable costs equal fixed costs. D. fixed costs are greater than variable costs.
Economics