-If the Market Price Falls from P₀ to P₁ in the Above

question 344

Multiple Choice

-If the market price falls from P₀ to P₁ in the above figure, then

• A) a new equilibrium quantity is established.
• B) there is a shortage equal to the distance EF.
• C) there will be a further tendency for price to fall.
• D) there is a surplus of goods on the market equal to the distance Q₁, Q₂.

Understand how to determine the optimal number of units of land, labor, and capital to hire based on Marginal Revenue Product (MRP) and factor costs.

Analyze the conditions under which a firm is considered a perfect or imperfect competitor in the labor market.

Calculate the total wage bill for a given number of workers and wage rate.

Apply the concept of Marginal Physical Product (MPP) and its role in determining labor demand.

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