An important feature of the DMP model is that
A) would-be workers care not just about the market wage, but about the chances of finding work.
B) firms can fire workers.
C) workers can choose to shirk on the job.
D) firms maximize revenue.

Question

Quizplus · Accepted Answer

The DMP model emphasizes the importance of job search and matching efficiency in determining employment outcomes. Workers take into account not only the market wage but also the probability of finding work when deciding how much to supply in the labor market. This feature highlights the importance of frictions and imperfections in the labor market that can affect the efficiency of job matching and the allocation of resources. Options B, C, and D are not as central to the DMP model as option A. While firms do have the option to fire workers, this is not unique to the DMP model and is a feature of many labor market models. Shirking on the job can also be a concern in any labor market, but it is not a defining feature of the DMP model. Finally, while firms do aim to maximize revenue, this is a general feature of economic models and not unique to the DMP model.

An Important Feature of the DMP Model Is That