If a firm finds that, at its current level of employment, VMP > W, it will
A) be maximizing profits.
B) be minimizing profits.
C) increase the amount of labor it hires.
D) decrease the amount of labor it hires.
C
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Because firms in perfectly competitive markets can sell any quantity without driving down prices, they should:
A. produce as much as possible to maximize profits. B. produce at the lowest cost per unit to maximize profits. C. try to flood the market. D. increase quantity until the additional profit it earns on its last unit sold is zero.
Which of the following is not correct?
a. Toys for Tots, a program that collects new toys to distribute to poor children at Christmas, is an example of an in-kind transfer. b. Supporters advocate the use of in-kind transfers because they restrict the ability of recipients to purchase alcohol and drugs. c. Critics argue that in-kind transfers are inefficient and disrespectful. d. For a program to qualify as an in-kind transfer, it must have government approval.
One of the characteristics of the cap-and-trade system is that
A. there is no way to ensure that pollution is reduced below some allowable total amount. B. it is more expensive than a command-and-control system. C. it is inflexible, and does not respond well to differences in the marginal cost of pollution reduction. D. it reduces the economic damage that would have been done by a command-and-control system.
Moral hazard is more likely to arise when:
A. one side of an economic relationship cannot observe the behavior of those on the other side. B. adverse selection is present. C. insurance policies have high deductibles. D. people are uninsured.