Dr. D. is a critic of standard microeconomic analysis. In one of his frequent tirades, he was heard to say, ‘‘Take the argument for upward-sloping, long-run supply curves. This is a circular argument if I ever heard one. Long-run supply curves are said to be upward sloping because input prices rise when firms hire more of them. And that occurs because the long-run supply curves for these inputs are upward sloping. Hence, the argument boils down to ‘long-run supply curves are upward sloping because other supply curves are upward sloping.’ What nonsense!’’ Does Dr. D. have a point? Explain clearly
Dr. D. is a critic of standard microeconomic analysis. In one of his frequent tirades, he was heard to say, ‘‘Take the argument for upward-sloping, long-run supply curves. This is a circular argument if I ever heard one. Long-run supply curves are said to be upward sloping because input prices rise when firms hire more of them. And that occurs because the long-run supply curves for these inputs are upward sloping. Hence, the argument boils down to ‘long-run supply curves are upward sloping because other supply curves are upward sloping.’ What nonsense!’’ Does Dr. D. have a point? Explain clearly
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter8: Perfect Competition
Section: Chapter Questions
Problem 6SCQ: A firms marginal cost curve above the average variable cost curve is equal to the films individual...
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Dr. D. is a critic of standard
In one of his frequent tirades, he was heard to
say, ‘‘Take the argument for upward-sloping,
long-run supply
if I ever heard one. Long-run supply curves are
said to be upward sloping because input
rise when firms hire more of them. And that occurs
because the long-run supply curves for these
inputs are upward sloping. Hence, the argument
boils down to ‘long-run supply curves are upward
sloping because other supply curves are upward
sloping.’ What nonsense!’’ Does Dr. D. have a
point? Explain clearly.
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