the more elastic the demand for the good labor produces, the less elastic the demand for labor. True or False
When a monopolistically competitive firm is in long-run equilibrium, average total cost is at its minimum. True or False
Assistance needed.
Please type your subject in the School Subject box. Any other words, including obscure abbreviations, are likely to delay responses from a teacher who knows that subject well.
False. The more elastic the demand for the good labor produces, the more elastic the demand for labor.
False. When a monopolistically competitive firm is in long-run equilibrium, average total cost is not necessarily at its minimum. The firm may still be operating at a level where average total cost is higher than the minimum point.
The statement "the more elastic the demand for the good labor produces, the less elastic the demand for labor" is generally false. The elasticity of demand for labor is determined by how responsive the demand for labor is to changes in its price (wage rate). If the demand for the good labor produces is more elastic (meaning that a small change in the price of the good leads to a larger change in quantity demanded), it suggests that the demand for labor is more sensitive to its price changes, making the demand for labor itself more elastic.
Regarding the second statement, "When a monopolistically competitive firm is in long-run equilibrium, average total cost is at its minimum," this statement is false. In a monopolistically competitive market structure, firms have some degree of market power and can differentiate their products. Each firm faces a downward-sloping demand curve for its product. In the long-run equilibrium, firms in monopolistic competition earn normal profits (zero economic profit) but not at the minimum point of average total cost (ATC). In the long run, the firm produces where marginal cost (MC) equals marginal revenue (MR), but the ATC may not be at its minimum point. The ATC can be higher or lower than the minimum point depending on the specific characteristics of the market and the firm.