The theory that firms will be slow to change their products' prices in response to changes in demand because there are costs to changing prices is called
A) transactions cost theory.
B) cost—benefit theory.
C) menu cost theory.
D) gift exchange theory.
C
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Marginal cost is equal to
A) the total cost of a firm's production. B) total cost minus fixed cost. C) a cost that is not related to the quantity produced. D) the change in total cost that results from a one-unit increase in output. E) the change in fixed cost that results from a one-unit increase in output.
Suppose the downward sloping labor demand curve shifts rightward in a labor market with a single employer (monopsony). What happens to the equilibrium wage and level of employment in the market?
A) Wage and level of employment increase. B) Wage increases and level of employment declines. C) Wage decreases and level of employment increases. D) Wage and level of employment decline.