Profit maximization requires that
A) the marginal factor cost of every input equals that input's marginal physical product.
B) the marginal factor cost of every input equals that input's marginal revenue product.
C) the amount of one input hired divided by the amount of another input hired equals the total costs of the first input hired divided by the total costs of the second input.
D) equal amounts of each input are employed.
Answer: B
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Assuming that workers are fully aware of their working conditions, which of the following will not happen when the government mandates pollution control to protect workers' health?
A. Wages will fall at all but the cleanest firms. B. Firms with low profits before the mandate may shut down or exit the industry. C. The air in workplaces will become cleaner. D. Employment will likely decrease. E. Worker utility will increase.
Which would be considered an investment according to economists?
A. The purchase of newly issued shares of stock in Microsoft. B. The sale of government bonds by the nation's central bank. C. The construction of a new computer chip factory by Intel. D. The purchase of shares of stock by Fidelity, a mutual fund company.
Given a change in food prices, farmers are typically able to respond rapidly with a change in output.
Answer the following statement true (T) or false (F)
For a perfectly competitive industry, diminishing marginal returns
A. occur only in the long run. B. occur in both the short run and in the long run. C. occur only in the short run. D. Diminishing marginal returns do not occur in perfectly competitive industries.