If a firm is using a resource hired in a perfectly competitive market, and if the price of the resource exceeds the marginal revenue product of the resource,
a. more of the resource should be used.
b. less of the resource should be used.
c. the firm should pay a lower price for the resource.
d. the firm should pay a higher price for the resource.
e. the firm is using the optimal amount of the resource
B
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Contractual provisions based on indexing are also called
a. withdrawal clauses. b. swap clauses. c. escalator clauses. d. averaging clauses.
An important difference between the situation faced by a profit-maximizing monopolistically competitive firm in the short run and the situation faced by that same firm in the long run is that in the short run,
a. price may exceed marginal revenue, but in the long run, price equals marginal revenue. b. price may exceed marginal cost, but in the long run, price equals marginal cost. c. price may exceed average total cost, but in the long run, price equals average total cost. d. there are many firms in the market, but in the long run, there are only a few firms in the market.
Which of the following would a macroeconomist consider as investment?
a. Marisa purchases a bond issued by Proctor and Gamble Corp. b. Karlee purchases stock issued by Texas Instruments, Inc. c. Charlie builds a new coffee shop. d. All of the above are correct.
Hurricane Katrina resulted in a decline in oil production infrastructure along the gulf coast. As a result there was an unexpected decline in oil and natural gas supplies in 2005. Suppose that this caused an increase in the price level and a decline in
real GDP in 2006. Also assume that potential real GDP continued to grow due to other factors. You can assume the aggregate demand curve did not change. Show the macroeconomic equilibrium for 2005 and 2006 using the dynamic aggregate supply and aggregate demand model. What will be an ideal response?