The production function (or output per laborer) curve is
a. upward sloping and arched to reflect the law of constant returns
b. upward sloping and arched to reflect the law of diminishing returns
c. downward sloping and arched to reflect the law of increasing returns
d. downward sloping and arched to reflect the law of diminishing returns
e. horizontal, its level depending on the capital output ratio
B
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Normal profit is
A) part of the firm's opportunity costs. B) the same as economic profits. C) part of the firm's explicit costs. D) Answers A and B are correct. E) Answers A and C are correct.
If two variables both increase at the same time or decrease at the same time, they are
A) unrelated to each other. B) positively related. C) negatively related. D) conversely related.
The closer the economy is to capacity, the greater the risk that fiscal or monetary stimulus will cause
A. An increase in the price level and no change in output. B. No change in the price level and no change in output. C. Only an increase in output. D. A decrease in the price level and no change in output.
An apple farmer must decide how many apples to harvest for the world apple market. He knows that there is a one-third probability that the world price will be $1, a one-third probability that it will be $1.50, and a one-third probability that it will be $2. His cost function is C(Q) = 0.01Q2. The expected profit-maximizing quantity is:
A. 150. B. 0. C. 90. D. 75.