Whenever the ratio of marginal products to input prices differs across inputs,
A. no change will necessarily follow because the process could still be at peak efficiency.
B. a firm's costs could be reduced by shifting input usage toward the input with the lower marginal product to price ratio.
C. the marginal products of inputs will adjust as input combinations change to correct for the inefficiency.
D. the costs of the inputs adjust to bring the marginal product ratios and cost ratios together.
Answer: C
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The brand name of a firm
A) has nothing to do with the profitability of a firm. B) has been considered irrelevant by economists since profits for a monopolistic competitive firm are zero in the long-run. C) relates to consumers' perception of product differentiation and to the market value of a firm. D) is important in the short-run but not in the long-run.
Tombstones are produced in a monopolistic competitive market. One producer, Rolling Stones, sells 20 tombstones a week at a price of $500 each. Its average total cost is $600 . From this information, we can tell:
a. new tombstone firms will want to enter. b. this producer is losing $2,000 a week. c. this producer is making an economic profit of $400. d. this producer is setting MR = MC. e. this producer should increase production.
Which of the following is most likely to cause the dollar to depreciate?
a. higher domestic interest rates b. an increase in the rate of inflation abroad c. a shift by the Fed to a more expansionary monetary policy d. a decrease in foreign interest rates
Which of the following applies to a real-world socialistic economy?
A. private ownership of all factors of production B. government ownership of all factors of production C. government ownership of most of the factors of production D. lack of central planning