A profit-maximizing, competitive firm will always hire an additional worker when the additional worker makes a positive contribution to
a. total revenue.
b. total profit.
c. the value of the marginal product of labor.
d. marginal revenue.
b
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Will the problems of credit markets disappear when developing countries become more affluent?
What will be an ideal response?
The opportunity to increase profitability is the primary reason that firms decide to export.
a. true b. false
Refer to the graph below. Suppose that the economy is at an initial equilibrium where the AD1 and AS1 curves intersect. If cost-push inflation occurs and the government subsequently implements expansionary policy, then the effect of such policy is to shift:
A. AD1 to AD2, which increases the price level from P1 to P2, and increases real domestic output from Q3 to Q2
B. AS1 to AS2, which increases the price level from P1 to P2, and decreases real output from Q1 to Q2
C. AD1 to AD2, which increases the price level from P2 to P3, and increases real output from Q2 to Q1
D. AS2 to AS3 which increases the price level from P2 to P3, and decreases real output from Q2 to Q3
As long as marginal cost is below marginal revenue, a perfectly competitive firm should:
A. hold production constant. B. decrease production. C. increase production. D. reconsider past production decisions.