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Usury Laws as Price Ceilings in Financial Markets

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

How are Usury Laws as Price Ceilings in Financial Markets?Usury Laws act as Price Ceilings in Financial Markets as they prohibit lenders from charging above a stated rate of interest.The demand and supply model predicts that at the lower price ceiling interest rate,...

Labor Market Power of Employers

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

How do Employers Have Labor Market Power? How does market power by an employer affect labor market outcomes? Intuitively, one might think that wages will be lower than in a competitive labor market. Let’s prove it. We will tell the story for a monopsonist, but the...

Labor Market – Bilateral Monopoly

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is a Bilateral Monopoly in a Labor Market?What happens when there is market power on both sides of the labor market, in other words, when a union meets a monopsony? Economists call such a situation a bilateral monopoly.Employment, L*, will be lower in a bilateral...

Market Competition and Innovation

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

How does Market Competition Affect Innovation?Market competition can provide an incentive for discovering new technology because a firm can earn higher profits by finding a way to produce products more cheaply or to create products with characteristics consumers...

Marginal Cost of Labor

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is the marginal Cost of Labor?The marginal cost of labor is the cost to the firm of hiring one more worker. However, here is the thing: we assume that the firm is determining how many workers to hire in total. They are not hiring sequentially. There are a couple...
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