Explain why the labor supply curve is positively sloped. Explain why labor demand is downward sloping
What will be an ideal response?
It is assumed that additional labor is supplied at higher real wage rates. At a higher real wage rate, the price of leisure is greater in terms of foregone income. Along the labor demand curve, the real wage is equal to the marginal product of labor. Because of diminishing marginal returns, the marginal product of labor falls as the quantity of labor rises, so the real wage must also fall as the quantity of labor rises.
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Which of the following describes two-part tariff pricing?
A) A firm charges two different prices for the same good. B) An importer has to pay a tax at the nation's borders, and a sales tax when the good is sold. C) A buyer must pay a down payment and monthly payments to buy big-ticket items such as a car, a plasma television, or a suite of furniture. D) A buyer pays an initial price for entrance to the market and an additional fee for each unit of the product purchased.
Below, the graph on the left shows the short-run marginal cost curve for a typical firm selling in a perfectly competitive industry. The graph on the right shows current industry demand and supply.
If the firm's demand and marginal revenue curves were drawn in the left-hand graph, what would be the elasticity of demand?
A. -0.6 B. zero C. infinitely elastic D. -6 E. unitary