How do firms decide how many skilled laborers, unskilled laborers, machines, and other factors of production to employ?

1. What are the barriers to entry that protect some firms against competition from potential market entrants?

2. In the early 2000s, OPEC decided to restrict production in an effort to raise oil prices. We saw the power of OPEC at the gas pump as prices rose nearly 60 cents in the space of a year – peaking at over $2 a gallon in some areas of the Midwest during the summer of 2001. What is OPEC? Why does it possess power over global oil prices?

3. In the early 2000s the electric industry in a number of states was deregulated – meaning that customers would potentially be able to purchase electricity from more than one provider. How might such a disruption of the monopoly structure be a good or a bad thing for the small electric consumer?

4. Discuss the concept of marginal productivity. How do employers utilize this economic tool?

5. How do firms decide how many skilled laborers, unskilled laborers, machines, and other factors of production to employ?

6. How is the quantity supplied of a resource related to its price in the short run? In the long run?

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