In equilibrium with an Edgeworth production box
A. one is on the contract curve.
B. the production of one good could increase without decreasing the production of the other.
C. MPK/MPL = PL/PK.
D. MPK * MPL = PL * PK.
E. All of these are true
Answer: A
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Let C = 550 + 0.8y and I = 75. Assume no government or foreign sectors. If investment increases by 100, the equilibrium output increases by a total of
A) 60. B) 175. C) 500. D) 800.
Refer to Figure 15-15. The profit-maximizing price is
A) P1. B) P2. C) P3. D) P4.
Which of the following would prevent a labor market from being classified as perfectly competitive?
a. It is difficult for new workers to enter the market. b. All workers have the same abilities. c. Exiting the market is easy for workers who are currently in the market. d. Both buyers and sellers of labor are well-informed about market conditions. e. Each firm hires only a tiny fraction of the total labor in the market.
Equilibrium GDP
a. is not affected by nominal wage adjustments b. represents the level of output at which public welfare is maximized c. in the long run is equal to the average of the short-run GDP equilibria d. is influenced by long-run adjustments in the labor market e. falls if aggregate demand increases