According to the Two-Sided Search Model, in Equilibrium Labour Market

question 2

Multiple Choice

According to the two-sided search model, in equilibrium labour market tightness tends to be high when

• A)profits are close to zero.
• B)the cost of a vacancy is high relative to the firm's share of the surplus.
• C)the firm's share of the surplus is high relative to the cost of a vacancy.
• D)employment insurance benefits are high relative to the productivity of a match.
• E)the firm's share of the surplus is increasing in market tightness.

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Definitions:

Income Tax Rate

The rate at which taxes are levied on an individual or company's income.

Discount Factor

A multiplier used in discounted cash flow (DCF) analysis to determine the present value of future cash flows.

Income Tax Rate

The measure at which income is taxed, affecting both companies and individuals.

Straight-Line Depreciation

Straight-line depreciation is a method to allocate the cost of a tangible asset over its useful lifespan evenly, implying an equal expense rate for each year of the asset's use.