If the price of labor is $5 and the price of capital is $10, what is the marginal rate of technical substitution at the optimal input choice?
A. 0.5
B. decreasing
C. 2
D. increasing
E. none of the above
Answer: A
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The price of wine has risen from $7 to $9 per bottle and the price of cheese has fallen from $6 to $5 per pound, while Anne's income has stayed fixed at $46 per week. Since the price changes, Anne has been buying 4 bottles of wine and 2 pounds of cheese per week. We can conclude that
a. Anne is indifferent about the price changes. b. Anne is worse off after the price changes. c. Anne is better off after the price changes. d. Anne may be worse off, better off, or indifferent after the price changes.
All of the following will cause an outward shift of the investment function EXCEPT
A) innovation that improves production efficiency at every level of output. B) a reduction in business taxes. C) business people becoming optimistic about the future. D) a decrease in the interest rate.
In a perfectly competitive market profit attracts entry
a. True b. False
When a country has flexible exchange rates the:
a. Capital account must be equal to and carry the opposite sign of the financial account b. Reserves account must be positive. c. Reserves account must be negative. d. Current account must equal the reserves account. e. None of the above.