Question

TRUE or FALSE

a) In Perfect competion, each firm should shut down when it makes a zero profit
b) In short run each monopolistically competitive firm has no market power to set its own price.
c) There is a trade-off between labor and leisure in the demand of labor.
d) In a duopoly's game, a firm's dominat strategy is a better strategy for the firm than any other alternative one, no matter what strategy its rival chooses.
e) The skill premium, which is defined as the ratio of the wages of skilled to unskilled workers, is a compensating differentail that rewards additional educational education and training

Answer 1

Ans

1 false not till price falls below Avc in shortrun

2 false Due to product differentiation they can change d

price

3 false There is tradeoff of leisure and wages in supply of labour

4 Yes dominant strategy always fetches more returns

5 True. Generally skills are gained through education. But it need not be always