Suppose That This Graph Describes the Current Labor Market for High

question 79

Multiple Choice

Suppose that this graph describes the current labor market for high school teachers: Given an initial wage of w*, then immediately following a decrease in supply:

• A)there will be a shortage of high school teachers.
• B)there will be an excess supply of high school teachers.
• C)the reservation wage of each remaining teacher will fall.
• D)the equilibrium wage will fall.

Understand the conditions leading to long-run equilibrium in monopolistically competitive markets.

Distinguish among short-run profits, losses, and break-even points for firms in different market conditions.

Recognize changes in productive capacity and the introduction of new products as factors affecting monopolistic competition.

Understand the characteristics and outcomes of monopolistic competition, including product differentiation and market behavior.

---

Definitions:

Investment Opportunity

A situation or option through which an investor can potentially increase their wealth by allocating resources in a way that generates returns.

Margin

Net operating income divided by sales.

Contribution Margin Ratio

The percentage of each sale that contributes to covering fixed costs, calculated as contribution margin divided by sales revenue.

Fixed Expenses

Expenditures that stay unchanged despite differences in the volume of production or sales, covering items like rental fees, payroll, and coverage costs.