Suppose a firm has one variable input, labor. Why is the MRPL curve for a competitive firm above the MRPL curve for a monopolist?
A) Without competition from other firms, monopolies are less efficient and the marginal product of labor is lower at each level of output.
B) Although the marginal product of labor may be the same under both market structures, the marginal revenue of the monopoly declines with output.
C) Monopolists have less incentive to invest in worker training and other methods for improving labor productivity, so the marginal product of labor is lower in the monopoly case.
D) none of the above
B
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Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting downward C. Aggregate demand shifting rightward D. Aggregate demand shifting leftward
You are a hotel manager and you are considering four projects that yield different payoffs, depending upon whether there is an economic boom or a recession. The potential payoffs and corresponding payoffs are summarized in the following table.ProjectBoom (50%)Recession (50%)A$20-$10B-$10$20C$30-$30D$50$50The variance in the returns of project B is:
A. 225. B. 1,600. C. 0. D. 900.
In the employment of any resource, a firm should
A) equate marginal revenue product with the cost of the additional resource. B) hire each input unit that adds more to revenue than it adds to costs. C) hire each input unit provided its marginal physical product is greater than zero. D) A and B are both correct.
On the long-run aggregate supply curve
A) an increase in the price level increases the aggregate quantity of GDP supplied. B) an increase in the price level reduces the aggregate quantity of GDP supplied. C) an increase in the price level has no effect on the aggregate quantity of GDP supplied. D) an increase in the price level increases the level of potential GDP.