When studying how some event or policy affects a market, elasticity provides information on the
a. change in the costs of production.
b. tradeoff between equality and efficiency.
c. effect on the budget deficit or surplus.
d. direction and magnitude of the effect.
d
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Profit-maximizing employment is the quantity of labor at which
A) marginal revenue product is equal to marginal factor cost. B) marginal revenue product is equal to product price. C) marginal factor cost is equal to marginal revenue. D) marginal factor product is equal to product price.
Other things constant, countries with higher investment rates will
A) have lower standards of living. B) tend to have higher incomes in the future. C) have to use central government planning to allocate investment. D) have to impose high taxes in order to finance the investment.
If the MPC is 0.9, and the government cuts spending by $200b, the overall effect on GDP will be:
A. an increase of $2,000b. B. an increase of $180b. C. a decrease of $1,800b. D. a decrease of $2,000b.
When a perfectly competitive firm is in long-run equilibrium, economic profits
A. are zero. B. are negative. C. are positive. D. may be positive, zero or negative depending upon costs.