... Labor supply
decisions are made by individuals choosing the most satisfying combination of
work and other (leisure) activities. With a larger income, the individual can afford
to work fewer hours: ... wants to encourage individuals on welfare to become employed. It is
considering two possible incentive programs for firms.
A. Give the firm $2 per hour for every individual on welfare who is ...
labor.
Chapter 14: Markets for Factor Inputs
232
CHAPTER 14
MARKETS FOR FACTOR INPUTS
REVIEW QUESTIONS
1. Why is a firm’s demand for labor curve more inelastic when the firm has monopoly...
... goods
between two individuals. The box is formed by inverting the indifference curves
of one individual and superimposing these on the indifference curves of another
individual. The sides of ... satisfaction (utility) for one individual on one axis and levels of
satisfaction for a second individual on the other axis. (Of course, more than two
individuals can be represented with more ... further trading will leave one individual better off without making the other
individual worse off. Points outside the frontier are not feasible unless the
individuals are given greater amounts...
... efficient provision.
11. A village is located next to 1000 acres of prime grazing land. The village presently
owns the land and allows all residents to graze cows freely. Some members of the village ... Non-paying consumers can “free-ride” on
commodities provided by paying customers. Public television is funded in part by
contributions. Some viewers contribute, but most watch without paying, hoping ... point of view of society as a whole.
Chapter 18: Externalities and Public Goods
284
12. Public television is funded in part by private donations, even though anyone with a
television...
... that A will turn down any offer giving her less
than $79, so B must offer $80 to A, leaving $10 for B. At the first stage, A knows B
will turn down any offer giving him less than $10. So A can ... apparently
irrational behavior. Both types of strategic behavior might deter entry, but for
different reasons. While an increase in capacity reduces expected profits by
reducing prices, irrational behavior reduces ... industries, the same firms compete over a long period of time,
setting prices and observing each other’s behavior repeatedly. Given that the number of
repetitions is large, why don’t collusive outcomes...