Author Question: Suppose an economy produces milk and honey, and milk is plotted along the horizontal axis of the ... (Read 56 times)

jman1234 · **on:** Jul 1, 2018

Suppose an economy produces milk and honey, and milk is plotted along the horizontal axis of the production possibilities frontier. The MRT is 2.5 at the current point of production, and the price of honey is 5 per unit.

What is the current price of milk if the market outcome is efficient? A) 12.50 per unit
B) 10 per unit
C) 2 per unit
D) 1 per unit

Question 2

Suppose the upward sloping labor supply curve shifts leftward in a labor market with a single employer (monopsony). What happens to the equilibrium wage and level of employment in the market?

A) Wage and level of employment increase.
B) Wage increases and level of employment declines.
C) Wage decreases and level of employment increases.
D) Wage and level of employment decline.