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
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A less developed country can increase its capital stock by
a. raising taxes on purchases of capital goods b. temporarily accepting unusually high unemployment rates c. reducing government spending d. shifting resources away from production of consumer goods and toward production of capital goods e. providing more opportunities for individuals to spend their accumulated savings
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.
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.
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?
A) $400 B) $500 C) $1,000 D) $1,500