In a purely competitive labor market, a profit-maximizing firm will hire labor up to the point where the marginal revenue product of labor equals the
A. wage rate, or the price of labor.
B. marginal cost of one extra unit of output.
C. price of the product.
D. average cost of each unit of output.
Answer: A
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If a one percent increase in the price of bananas leads to a one percent decrease in the quantity of bananas demanded, then the demand for bananas is
A) elastic. B) inelastic. C) unit-elastic. D) perfectly inelastic.
Which of the following is not an example of an intermediate good?
A. an oven bought by a homeowner B. gasoline bought by a trucking company C. flour bought by a bakery D. office supplies bought by an accounting firm
Free markets, by definition, must always be efficient.
Answer the following statement true (T) or false (F)
Labor productivity increased so much in the second half of the 1990s because of
A. cheaper foreign imports used in production. B. improved information and communications technologies. C. higher levels of educational attainment by workers. D. increased foreign competition.