Other things being equal, imperfect competition in resource markets results in: A) Maximization of societys net...
Other things being equal, imperfect competition in resource markets results in:
A) Maximization of societys net welfare
B) Effeciency in the allocation of inputs
C) Less labor hired than if resource markets were competitive
D) Lower prices and high output in product markets for goods and services
Homework Answers
If resource market is perfectly competitive then labor is hired
corresponding to intersection of the marginal revenue product curve
of labor and the supply curve of labor.
If resource market is imperfectly competitive then labor is hired corresponding to the intersection of marginal revenue product curve of labor and the marginal resource cost curve.
Marginal resource cost curve lies to the left of the supply curve of the labor.
Thus,
Other things being equal, imperfect competition in resource markets results in less labor hired than if resource markets was competitive.
Hence, the correct answer is the option (C).
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