“Optimal input curve analysis is useless. Since firms never know the demand for their product with certainty, they will rarely operate at the optimal input combination.” Agree or disagree?
What will be an ideal response?
Disagree. Optimal input analysis is a guide to correct decision making. Firms may not be able to estimate precisely MPP or production functions; a part of business acumen is instinct. Nevertheless, the outcomes should closely resemble the predictions from a model of optimal input usage if the firm is to be successful.
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Compared to 1929, total output in the U.S. today is approximately ________ times larger.
A. 5 B. 25 C. 2 D. 15
Starting from long-run equilibrium, an increase in autonomous consumption results in ________ output in the short run and ________ output in the long run.
A. higher; higher B. higher; potential C. lower; higher D. lower; potential
The Federal Reserve's credit policy refers to
A) the Fed's direct lending to homeowners and students. B) regulations on terms on credit cards that banks issue. C) a direct credit on bank depositors' saving and checking accounts. D) the Fed's direct lending to financial and nonfinancial firms.
If income decreases or the price of a complement rises
A) the demand curve for a normal good shifts leftward. B) the demand curve for a normal good shifts rightward. C) there is an upward movement along the demand curve for the good. D) there is a downward movement along the demand curve for the good.