A monopolistically competitive firm in the long run will
A. have a demand curve tangent to its AC.
B. have a demand curve below its AC.
C. have a demand curve above its AC.
D. operate where excessive profit can be achieved.
Answer: A
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Marginal revenue product can be calculated using the formula marginal product × output price
A) only if the both marginal product of labor and the output price are constant. B) only if the firm has market power in the labor market C) only if output price is constant. D) only if the marginal product of labor is constant.
Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and real GDP in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period rises, and real GDP rises. b. The quantity of real loanable funds per time period rises, and real GDP remains the same. c. The quantity of real loanable funds per time period and real GDP remain the same. d. The quantity of real loanable funds per time period rises, and real GDP falls. e. The quantity of real loanable funds per time period falls, and real GDP falls.
Diminishing marginal utility means that as more of a good is consumed
A. the rate at which total utility increases stays the same. B. there is no impact on the rate of change of total utility. C. the rate at which total utility increases starts to increase. D. the rate at which total utility increases starts to diminish.
In a labor market without an efficiency wage, minimum wage, or union wage, when the real wage rate exceeds the equilibrium real wage rate, there is a ________ of labor and the real wage rate will ________
A) surplus; fall B) shortage; fall C) shortage; rise D) surplus; rise E) surplus; not change because only efficiency wages or union wages can change.