A perfectly competitive firm discovers that its MRPL divided by the wage equals 1.5. The firm should
A) check the MRP of the other inputs and divide them by their prices. If they are all equal to 1.5 it is maximizing profits.
B) hire more labor.
C) purchase more capital.
D) try to pay a lower wage rate.
Answer: B
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Refer to Figure 11-3. Which of the following would cause an economy to move from a point like A in the figure above to a point like B?
A) a technological regression B) a decrease in capital per hour worked C) an increase in capital per hour worked D) an improvement in technology
The unemployment rate for managerial and professional workers tends to be high.
Answer the following statement true (T) or false (F)
The graph for the Phillips curve shows an ______ relationship between the rate of unemployment and the rate of inflation.
a. independent
b. indeterminate
c. identical
d. inverse
The endowment effect is used to describe the mistake a consumer makes when he accounts for the monetary costs of his decisions but ignores the nonmonetary opportunity costs.
a. true b. false