Exploring Macroeconomics
8th Edition
ISBN: 9781544337722
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 8, Problem 9P
To determine
(a)
To explain:
The reason behind wearing a suit is a weaker signal of ability than the educational achievement.
To determine
(b)
To explain:
The reason behind some majors in colleges provide more powerful signals for future employment.
To determine
(c)
To explain:
The reason behind a double majoring provides a more powerful market signal that having a single major.
To determine
(d)
To explain:
The reason for students can be said to overinvest in grades than in learning course material
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The accompanying graph shows the short-run demand and cost situation for a price searcher in a market with low barriers to entry.
Price (dollars)
24
8
MC
ATC
MR
30
D
45 50
Quantity/time
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The maximum profit the firm can earn in this situation is $
per unit for this output.
How will the situation change over time?
Profits will attract rival firms into the market until the profit-maximizing price falls to the level of per-unit cost.
◇ Losses will induce firms to leave this market until the profit maximizing price falls to zero.
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