If the MPP of labor is 60 and the price of labor per period is $20, the MPP of machinery is 75 and the price of the machinery per period is $25, in order to achieve optimal input proportions the firm should use
a. more labor and less machinery.
b. more machinery and less labor.
c. more labor with the same amount of machinery.
d. the current combination.
d
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If the average costs of production decline with increases in output, then the larger a firm is, the lower its per unit costs will be
a. True b. False Indicate whether the statement is true or false
Why does the price level in a perfectly competitive market move toward the zero-profit point?
a. Because firms enter and exit the market in response to gains and losses b. Because short-run losses reverse the effects of long-run gains c. Because profitable firms increase short-run productivity d. Because firms operate below the average cost curve
If it were not for the automatic stabilizers in the U.S. economy,
a. the Federal Reserve would have less reason than it has now to monitor stock prices. b. it would be more desirable than it is now for the Federal Reserve to target an interest rate. c. a strict balanced-budget rule would be more desirable than it is now. d. output and employment would probably be more volatile than they are now.
In the presence of ________ externalities, too much of the good is produced and in the presence of ________ externalities, too little of the good is produced.
A. positive; negative B. positive; no C. negative; positive D. no; negative