Question

1.What are the objectives of the competition act in Canada?

2.Explain the marginal revenue product (MRP) for labour.

3.Explain how wage rates are determined.

4.Explain why there might be a wage difference between two jobs. What could reduce the wage differential? What barriers might prevent the differential from being reduced?

5.Explain how demand for labour is a derived demand.

6.What is are positive and negative externalities. Explain using examples for each.

7.Use a diagram to explain the impact on a market when there are marginal social costs from negative externalities or marginal social benefits from positive externalities.

8.Give an example of a free rider. What is the solution to the problem of free riders?

9.Explain a carbon tax and a cap-and-trade system. What are the pros and cons of each method of carbon pricing?

10. Use an example to explain how an efficient market may be a market with less equity.

11.What is the process of creative destruction? Explain using examples.

12.What happens if we regulate “price gouging” to keep the price of emergency supplies from rising during a disaster?

13.What is the purpose of price discrimination? Describe examples. What does this have to do with elasticity?

Give an example of a natural monopoly. Why are they established? Why do they need to be regulated?

14.What is the concept of economic rent? Why is economic rent so high?

15. Explain the difference between income and wealth. Why is there such an unequal distribution of both in our economy?

16. How does increasing human capital help to reduce poverty?

17. What is the purpose of pay equity leglislation?

Answer 1

Answer of Question 1

Canadian law of competition is to maintain efficiency and adaptability in canadian economy.The main purpose of this act to maintain and encourage competition in canadian market.

The objectives of an act to expand opportunities for canadian participation in world market and to recognize foreign competition and to provide an equitable opportunities for small and medium enterprises. Not only this but to provide competitive prices and variety of choices.

Answer for question 2

Marginal Revenue of Product of labour(MRPL): MRPL is extra revenue generated when additional worker is employed.

MRPL is given by MRPL= Marginal product of labour× Revenue.

Profit maximizing firm should employ labour until point where marginal revenue product of labour equals marginal cost of labour.MRPL curve is assumed to be demand curve for labour.

Answer for question 3

Wages determined in perfect and imperfect markets as follows:

In perfect competition wage fate is determined when demand of labour equals to supply for labour. wage equals to marginal revenue productivity of labour.In this Scenario it is subdivided into 3 phases.1)Supernormal profit,2) Normal profit,3) Losses

1) Supernormal profit= Average revenue product of labour> Marginal revenue product of labour.2) Normal profit=When ARPL= MRPL.3) Losses= ARPL<MRPL

Wage rate determination in Incomplete market with two cases

1)Perfect competition with product market and monospony labour market, 2) Monopoly in product market and monospony in labour market

Answer for question 6)

Externalities are defined as transactions among the parties have indirect impact on 3rd party. Positive externality in which third party has benefits to reap out of these transactions whereas Negative externality which accrues cost to third party due to these transactions. Examples can be given for each type of externality as follows. Positive externality example skills and knowledge acquired by an individual could be proved helpful to the big masses of society. Healthcare help to combat against contagious disease could help that community indirectly in better way.Negative externality example: Smoking practices run by an individual could harm others indirectly in a mode of passive smoking for which other individuals who are the victim of passive smoking pay the price.