In the Model of Price Setting, the Demand for the Firms

question 34

Multiple Choice

In the model of price setting, the demand for the firms product is:

• A)positively related to real income in the economy.
• B)positively related to the firms price relative to the price level.
• C)negatively related to the real wage the firm pays.
• D)all of the above.

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Definitions:

Factor Market

A marketplace where factors of production such as labor, capital, and natural resources are bought and sold.

Firms

business organizations engaged in the production and sale of goods and services, operating with the motive of earning profits.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choosing a particular action.

Labor Resource

Human work effort, both physical and mental, utilized in the creation of goods and services.