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ScienceForte ScienceForte
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A year ago

The demand and supply curves shown below apply to a competitive market for a factor used in the production of widgets.

Short description: A graph plots quantity of factor against factor price in dollars. Long description: The horizontal axis representing the number of factors ranges from 0 to 60, in increments of 10. The vertical axis representing factor price (dollars) ranges from 5 to 11, in increments of 1. The graph plots two lines and five points. The five points are as follows: A (20, 6), B (40, 8), C (50, 9), D (30, 11), and E (30, 7). From all five points, a horizontal dashed line and a vertical dashed line are drawn to meet the axes. Line, S passes through the following points: A, E, B, and C. Line, D passes through the following points: D and B. The two lines intersect at B.

FIGURE 13-2

Refer to Figure 13-2. If the supply and demand curves for the factor are as shown in the diagram, but the wage being paid is $9, and the market is at point C,



▸ the demand curve will shift to the left until equilibrium factor price and quantity are re-established.

▸ the wage is higher than the factor's marginal revenue product, and firms will reduce the amount of the factor employed.

▸ the demand curve will shift to the right until equilibrium factor price and quantity are re-established.

▸ the marginal revenue product is not equal to the marginal cost of the factor and firms will increase the amount of the factor employed.

▸ the wage is higher than the factor's marginal product, and firms will reduce the amount of the factor employed.
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Microeconomics

Microeconomics


Edition: 17th
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karisantikarisanti
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