Suppose the marginal rate of technical substitution for labor with capital is 5, the marginal product of labor is 8, and the marginal product of capital is 4. Assuming the law of diminishing marginal product applies to both labor and capital, this firm:
A. is minimizing the cost of producing its output.
B. could reduce costs by using fewer workers and more capital.
C. could reduce costs by using less capital and more workers.
D. could reduce the cost of producing the output by reducing workers and capital by the same proportion.
B. could reduce costs by using fewer workers and more capital.
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Aristotle believed voluntary trade should be
A) an exchange of unequal values. B) an exchange of equal values. C) an exchange of equal material possessions. D) an exchange of unequal material possessions.
A tax imposed by a government on imports of a good into a country is called a
A) tariff. B) value added tax. C) sales tax. D) quota.
Measuring the impact of a quota or tariff on the U.S. economy is an example of ________. Stating that a quota or tariff should be eliminated is an example of ________
A) econometric analysis; protectionism B) positive analysis; normative analysis C) statistical analysis; economic analysis D) trade analysis; an opinion
A firm has a fixed cost of $500 in its first year of operation. When the firm produces 100 units of output, its total costs are $3,500 . When it produces 101 units of output, its total costs are $3,750 . What is the marginal cost of producing the 101st unit of output?
a. $250 b. $275 c. $340.91 d. $350