Question

I have a 3 part question -- all multiple choice.

Part a)

Feenstra and Hanson’s empirical work provides support for the following explanation for the rising wage inequality in the U.S.

Inequality is rising due to rapid population growth.

Inequality is rising due to increasing trade deficit.

Inequality is rising due to both offshoring and skill-biased technological change.

Inequality is rising solely because of skill-biased technological change

Inequality is rising solely because of trade with East Asian countries.

part b)

In a monopolistically competitive industry,

a)long-run profit will be equal to zero.

b)long-run profit will be positive

c)there will be barriers to entry that prevent additional firms from entering the industry.

d)there will be a small number of firms that are very large and the rest will be very small.

Part c)

The two conditions characterizing the equilibrium in a monopolistically competitive industry are

a)MR > MC, P>AC

b)MR = MC, P>AC

c)MR > MC, P = AC

d)MR = MC, P = AC

Answer 1

a) Ans Feenstra and Hanson's empirical work provides suport provides the following explanation for the rising wage inequaity in the U.S. is-

Option d) Inequality is rising solely because of skill biased technological change.

b) Ans In a monopolistically competetive industry- option a) long run profit will be equal to zero (will make only normal profit)

c) Ans The two conditions for equilibrium in monopolistically compettive industry are-

option b) MR=MC, P>AC