"A firm should continue to hire more workers as long as wages are low." Do you agree or disagree? Why?
What will be an ideal response?
Disagree. The firm should hire workers up to the point at which the additional cost associated with hiring the last worker is equal to the additional revenue generated by hiring that worker. What is ignored in the statement is the revenue associated with hiring an additional worker: Even if wages are low, the additional revenue associated with the additional worker may not be enough to cover the additional costs associated with the wages.
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In the figure above, the DLF curve is the demand for loanable funds curve and the PDLF curve is the private demand for loanable funds curve. If there is no Ricardo-Barro effect, the figure shows a situation in which the government has a budget
A) deficit of $1 trillion. B) deficit of $1.5 trillion. C) surplus of $0.5 trillion. D) deficit of $0.5 trillion. E) surplus of $1 trillion.
Property and casualty insurance companies tend to invest heavily in municipal bonds because
A) the bonds have higher yields than corporate bonds. B) property and casualty insurance companies are required by regulators to hold at least 20 percent of their assets in the form of municipal bonds. C) the bonds are tax-exempt. D) they hold large state and local government pension funds, thus requiring them to hold an equal amount of municipal bonds.
Often managers require a payment due to their risk aversion. This payment is called
A) a golden parachute. B) greenmail. C) a poison pill. D) rollover compensation
Answer the question on the basis of the following information. A farmer who has fixed amounts of land and capital finds that total product is 24 for the first worker hired; 32 when two workers are hired; 37 when three are hired; and 40 when four are
hired. The farmer's product sells for $3 per unit and the wage rate is $13 per worker. Refer to the given information. The marginal revenue product of the second worker is: A. $24. B. $8. C. $15. D. $9.