Firms have an incentive to substitute capital for labor as the
A. price of labor decreases.
B. price of labor increases.
C. marginal product of labor increases.
D. price of capital increases.
Answer: B
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How is the price of a financial asset, such as government bonds, related to the interest rate?
What will be an ideal response?
All else equal, if oil prices decrease, annual oil consumption will ________ and the years it will take to deplete the stock of oil will most likely ________
A) decrease; increase. B) decrease; decrease C) increase; increase D) increase; decrease
Is the stock of a corporation with an excellent earnings record likely to be a better buy than the stock of a corporation doing very badly?
A) No, because the price of each stock will reflect differing situations. B) Only if their different earnings records have persisted for several years. C) Yes, because stocks with large dividend returns to owners are always good buys. D) Yes, because the future is more likely to resemble the past than to differ from it in any systematic way.
Economists normally assume that the goal of a firm is to: a. sell as many units of output as possible
b. maximize profits. c. sell products at the highest prices possible. d. maximize sales revenue.