If marginal revenue product is less than price of the input, the firm should use more of the input
a. True
b. False
Indicate whether the statement is true or false
False
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In the above figure, suppose the quantity produced is 40. Then
A) the marginal social cost of the 40th unit is $1. B) the willingness to pay for the 40th unit is $2, the equilibrium price. C) production is not efficient because MSB > MSC. D) production is not efficient because MSC>MSB.
The purpose of a crop limitation program is to
a. increase the demand for farm goods b. decrease the demand for farm goods c. increase the supply of farm goods d. decrease the supply of farm goods e. reduce the excess demand resulting from a price ceiling program
In the above figure, a price ceiling of $2 would
A) create a shortage. B) create a surplus. C) have no effect. D) cause the demand curve to shift leftward.
When the economy suffers a temporary negative supply shock and the central bank responds by changing the autonomous component of monetary policy to keep inflation at the target inflation rate, then
A) aggregate output drops in the short run. B) output will return to potential output over time. C) aggregate output is stabilized. D) all of the above. E) both A and B.