The above figure illustrates the case of a monopsony in the labor market. If the current wage paid is W1 and new wage legislation is passed that increases the minimum wage in this market to W2, the firm will
A) hire less labor at the higher wage and, according to the law of demand, moving from point D to B.
B) hire the same amount of labor as before the law was passed because it cannot adjust to wage changes.
C) hire more labor, moving from point C to B.
D) pay a higher wage, moving from point C to A.
Question 2
The International Maritime Bureau said the waters off Somalia are the world's most dangerous, accounting for nearly a third reported pirate attacks worldwide. Suppose all boats are insured to 100,000 and pay a premium of 15,000 each.
Suppose 10 out of 100 boats are attacked by pirates and these 10 file claims with their insurance. Has the insurance company earned an economic profit? A) Yes, they earned an economic profit of 500,000.
B) Yes, they earned an economic profit of 50,000.
C) No, they sustained an economic loss of 85,000.
D) No, they broke even.
Myopia (nearsightedness). In the uncorrected top figure, the image comes into focus in front of the
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A slave market in Marrakesh, Morocco. This lithograph is from the 1800s.
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