If the Firm Operates in a Competitive Labor Market

question 48

Multiple Choice

If the firm operates in a competitive labor market,

• A) it faces a positively sloped labor supply curve, and the marginal expense of labor is less than the market wage.
• B) it faces a horizontal labor supply curve, and the marginal expense of labor equals the market wage.
• C) it must compete against other employers by offering a generous compensation package.
• D) it faces a vertical labor supply curve, and it competes against other employers by moving to the lowest attainable point on the labor supply curve.

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Definitions:

Sympathetic Division

A part of the autonomic nervous system that activates what is often termed the fight or flight response.

Parasympathetic Division

A branch of the autonomic nervous system responsible for conserving energy and slowing down the body's responses.

Autonomic Nervous System

A part of the nervous system that controls involuntary functions of the body, such as heart rate, digestion, and respiratory rate.

Frontal Lobe

The part of the brain located at the front of each cerebral hemisphere, associated with higher cognitive processes such as reasoning, planning, parts of speech, movement, emotions, and problem solving.