A profit-seeking firm will choose the combination of inputs that maximizes profit, based on the:
A. local price of each factor of production.
B. total productivity of each factor of production.
C. substitutability of each factor of production.
D. ratio of each factor of production.
Answer: A
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Given the scenario described, if the market price of hammers decreased from $15 to $11:
Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13.. A. total producer surplus would fall by $4. B. producer surplus for each producer falls by $4. C. House Depot's producer surplus falls by $4. D. total producer surplus falls by $8.
A firm hires labor in a perfectly competitive labor market. If the wage rate is $44, the firm should hire
a. 44 workers b. all units of labor whose marginal product is 44 c. all units of labor whose marginal revenue product is $44 d. all units of labor whose marginal revenue product is greater than or equal to $44 e. all units of labor whose marginal revenue product is less than or equal to $44
A domestic monetary shock is least disruptive
A. under a floating exchange-rate system. B. under both fixed and floating exchange rates. C. under a fixed exchange-rate system without sterilization. D. under a fixed exchange-rate system with sterilization.
In the long-run perfectly competitive equilibrium, firms produce at the minimum of average total cost.
Answer the following statement true (T) or false (F)