In the DMP model,
A) There are N firms, Q is the labor force, and N-Q is the vacancy rate.
B) There are N consumers, Q is the labor force, and N+Q is the number of consumers choosing home production.
C) There are Q consumers, N is the labor force, and N-Q is the number of consumers choosing home production.
D) There are N consumers, Q is the labor force, and N-Q is the number of consumers choosing home production.

Question

Quizplus · Accepted Answer

The DMP (Diamond-Mortensen-Pissarides) model refers to a labor market model that assumes a matching function where firms match with workers to create jobs. In this model, N represents the number of workers or consumers, Q refers to the labor force, and N-Q represents the number of unemployed workers. The model does not consider home production, so option B and C can be ruled out. Therefore, the most appropriate choice is D, where N denotes consumers, Q represents the labor force, and N-Q indicates the number of unemployed workers.

In the DMP Model