Question

Task 1: Explain why incomplete contracts regarding effort may lead to profit-maximising firms offering employees wages above their reservation wage.

Task 2: From society’s perspective, is it better for a market to be served by one firm - a price-setting monopoly, or by many small price-taking firms? Discuss.

Task 3: Explain what monetary policy is, how it is implemented in Australia by the Reserve Bank of Australia, and what type of monetary policy you would recommend the RBA to implement at this point in time.

Answer 1

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