Table 1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus.Table 1.2Production Possibilities for BombersCombinationNumber of B-1 BombersOpportunity cost(Foregone Stealth)Number of Stealth BombersOpportunity cost (Foregone B-1)A20NA195 B35 180 C45 150 D50 100NAOn the basis of your calculations in Table 1.2, what is gained by producing at point B rather than point C?
A. 10 B-1 bombers.
B. 45 B-1 bombers.
C. 30 Stealth bombers.
D. 180 Stealth bombers.
Answer: C
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If profits are high because the price level rose,
A) the AS curve shifts leftward. B) it is likely the result of an increase in the real wage rate. C) business failures rise and the quantity of real GDP supplied increases. D) new businesses open and the quantity of real GDP supplied increases. E) potential GDP must be decreasing.
The profit-maximizing level of output for any firm in a perfectly competitive market is to produce where:
A. MC = MR. B. MC > MR. C. MC < MR. D. MR = P*.
If the MPP of labor is positive, the total revenue will grow with each additional worker hired. Yet firms stop hiring before MPP reaches zero because
a. the firm's physical capacity (factory) is limited, that is, the firm's ability to hire is limited by space b. there isn't a sufficient supply of workers at the wage rate paid by the firm c. the wage rate would have to increase, which reduces MPP d. they maximize their gains from hiring at MRP = wage rate and that does not occur at MPP = zero e. marginal revenue product will become negative before MPP does
The option to buy a company's stock at some future time at current prices is often given to CEOs
a. as an incentive to take actions that will raise the share price. b. because CEOs are often friends of those who hire them. c. as a means of discouraging the CEO from taking any risky actions. d. because this has become the custom of the business culture.