Describe the decision for a perfectly competitive employer in determining the profit maximizing quantity of labor to employ
The profit maximizing quantity of labor to employ exists at that quantity where the marginal revenue product of labor (MRP) equals the wage rate (W). The MRP equals the marginal product of labor multiplied by the price of the output produced. This information as well as the wage is required to decide the optimal number of workers to employ. If the MRP > W then employ more workers until they're equal.
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If the Federal Reserve wants to prevent a recession, it should ________.
A. decrease the money supply to raise interest rates and lower aggregate demand B. decrease the money supply to lower interest rates and increase aggregate demand C. increase the money supply to raise interest rates and lower aggregate demand D. increase the money supply to lower interest rates and raise aggregate demand
When income increases from $20,000 to $30,000 the quantity of inter-city bus trips taken per year decreases from 10 to 8. Hence
A) inter-city bus trips are a normal good. B) the income elasticity of demand for inter-city bus trips is -1.8. C) the income elasticity of demand for inter-city bus trips is -0.56. D) Both answers A and B are correct. E) Both answers A and C are correct.
Refer to Figure 7-3. What is the value of domestic producer surplus without a quota?
A) $5 million B) $15.75 million C) $38.5 million D) $53.5 million
If private property rights were established in the air, there would probably be
A. more air pollution. B. less air pollution. C. the same amount of air pollution that exists without private property rights in the air. D. better weather.