It is not sufficient for profit maximization that a production plan has all marginal revenue products equal to input prices -- because it must also be the case that the (marginal) technical rate of substitution is equal to the ratio of input prices (in absolute value).
Answer the following statement true (T) or false (F)
False
Rationale: Marginal revenue product being equal to input prices implies that the technical rate of transformation (which is equal to the ratio of marginal products) is equal (in absolute value) to the ratio of input prices.
You might also like to view...
If there is a dollar-for-dollar direct expenditure offset, then
A) increases in aggregate demand will also increase long-run aggregate supply. B) increases in government spending will not increase aggregate demand. C) increases in aggregate demand will increase the price level, but leave real output unchanged. D) increases in aggregate demand will increase real output, but leave the price level unchanged.
An example of a quota that protects an American industry is the quota on
a. tourists entering the country. b. sugar imports. c. sales of oil products to foreign countries. d. purchases of military hardware to foreign dictators. e. All of the above are examples of protective quotas.
Which of the following is a criterion for determining whether a foreign nation is dumping?
a. The good is not produced at home. b. The good is selling below the price in the exporting nation. c. The good is priced below average total cost. d. The good is selling below the price in the exporting nation or is priced below average total cost.
Diminishing marginal returns implies that:
A. marginal costs are decreasing. B. marginal costs are increasing. C. marginal costs are constant. D. marginal costs may be increasing or decreasing.