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Author Question: List two things that can cause the industry supply curve to shift. What will be an ideal ... (Read 19 times)

123654777

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on: Jun 29, 2018
List two things that can cause the industry supply curve to shift.
 
  What will be an ideal response?

Question 2

Assume that a firm pays its workers above the market-clearing wage in a competitive industry. Explain how this might be a strategy to mitigate the problem of moral hazard?
 
  What will be an ideal response?


aprice35067

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Reply #1 on: Jun 29, 2018
Answer to Question 1

(1.) A change in the costs of an input  for example, due to a change in the price of an input or change in technology.
(2.) A change in the number of firms in the industry.

Answer to Question 2

Supervising employees is costly but often necessary to insure that workers are doing their jobs. Paying workers a wage that is higher than the market-clearing wage may actually result in workers being more productive and less inclined to loaf around if the cost of losing one's job means a significant salary reduction.


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