Diane's Auto World installs tires on automobiles, light trucks, and sport utility vehicles. She is a profit-maximizing business owner whose firm operates in a competitive market. The marginal cost of installing a tire is $20 . The marginal productivity of the last worker that Diane hired was 2 tires per hour. What is the maximum hourly wage that Diane was willing to pay the last worker hired?
a. $10
b. $20
c. $40
d. There is insufficient information to answer this question.
c
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The decline in the transaction demand for money in the mid- and late 1970s
A) was accompanied by a fall in velocity. B) was predicted by most economists. C) may be partly explained by the development of money-market funds and other financial innovations. D) was the result of the Federal Reserve's easy-money policy.
Why do competitive firms enter the market in spite of the price war threatened by the dominant firm?
If the aggregate supply curve shifts outward, then unemployment
a. and inflation will both decrease. b. and inflation will both increase. c. will increase and inflation will decrease. d. will decrease and inflation will increase.
Which of the following is considered a problem with active policy?
a. Estimating the potential output b. Forecasting aggregate demand c. Tools must already be in place to achieve results relatively quickly. d. All of the above are problems with the implementation of active policy