An argument against optimum currency areas (OCA) is that the single currency and the common interest rate used in an OCA would mean one-size-fits-all monetary policy. Explain this argument, and consider whether and under what condit

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Input employment decisions (price and quantity) depend upon the market structure of both product and factor markets. Discuss.

Input employment decisions.

The objective of any ordinary firm in any given market is to maximise its profits. It generates these profits by selling its produce- whether it be goods or services- to consumers. The act of producing a finished good or service ordinarily requires the use of one or more inputs, each of which has its own characteristics and properties in relation to the production of the firms output. Very common examples of inputs- or factors of production- include capital goods (e.g. Machinery, tools, vehicles), labour, and energy (usually in the form of electricity). Different combinations of factors of production can change the level of a firms output, and the relationship between the quantity produced and the inputs used (and often relationships between the inputs themselves) is known as the production function. A production function can be expressed algebraically in the following form:

Function 1

Where (Q) represents output, which is a function (f) of whatever number of inputs used (X1 through to Xn). For example, a two input production function involving capital and labour could take