Some People Drop Out of the Labor Force During Times

question 45

Multiple Choice

Some people drop out of the labor force during times of recession:

• A) to go back to college, because the opportunity cost is lower during a recession.
• B) because they cannot find work and give up trying.
• C) and decide to take early retirement.
• D) All of these are true.

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Definitions:

MRP = MRC

This equation stands for Marginal Revenue Product equals Marginal Resource Cost, a condition for profit maximization in firms, indicating the most efficient level of output where the cost of the last unit of input equals the revenue it generates.

Wage Rate

The amount of compensation paid to labor per unit of time, which can vary based on factors such as industry, location, and level of skill.

Purely Competitive Market

A market structure characterized by a large number of small firms, homogenous products, and free entry and exit, leading to price taking behavior.

Imperfectly Competitive Market

A market structure where individual sellers have some control over the price of their goods due to lack of perfect competition.