In order to maximize net benefits, firms should produce where:

A. profits are zero.
B. total benefits equal total costs.
C. marginal benefits equal marginal costs.
D. marginal cost is minimized.


Answer: C

Economics

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A less developed country can increase its capital stock by

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Recessions

a. almost never occur in the American economy. b. follow a regular and predictable cycle. c. are common features of the American economy. d. have been abolished by wise macroeconomic policy.

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When recessions are the result of slowing growth in potential output, the government's best policy is to:

A. reduce government spending. B. promote saving and investment. C. decrease aggregate supply. D. increase aggregate demand.

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A firm uses an efficiency wage scheme to deter workers from shirking, which is detected 10% of the times. Suppose a risk-neutral worker. The industry ongoing wage is $3,000. The efficiency wage paid by this firm is $8,000. What is this worker's reservation wage?

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