If the price of a unit of output for a perfectly competitive firm is $5 and the profit-maximizing condition is met, then MPL/PL = MPK/PK = MPA/PA will be equal to
A. $5.
B. $1.67.
C. $0.20.
D. $0.05.
Answer: C
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The nominal interest rate is determined in the
A) bond market. B) stock market. C) exchange market. D) money market.
The statement, "John buys more of good X as his income increases, Ceteris paribus," means:
a. John's income is being held constant. b. John's purchases of good X are being held constant. c. John's income and purchases of this good are being held constant. d. the price of this good is being allowed to change.
If the government finances increased spending strictly through higher taxes, this action
a. increases the multiplier effect. b. has no impact on the multiplier effect. c. decreases the multiplier to a value greater than one. d. decreases the multiplier to one.
Exhibit 1 shows which of the following trends?
a. As the price of coffee decreases, Elizabeth demands less coffee.
b. As the price of coffee increases, Elizabeth demands less coffee.
c. As the price of coffee decreases, Elizabeth at first demands more coffee, but then demands less.
d. As the price of coffee increases, Elizabeth at first demands more coffee, but then demands less.