To answer the question, refer to the following figure, showing the marginal revenue product (MRP) and the average revenue product (ARP) curves of a perfectly competitive firm hiring a single variable input, labor.
If the wage is $15, how many workers will the firm hire?
A. 100
B. zero
C. 250
D. 200
Answer: D
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Constant returns to scale means that as all inputs are increased
A) total output remains constant. B) average total cost rises. C) average total cost rises at the same rate as do the inputs. D) total output increases in the same proportion as do the inputs.
Inflation targeting is a framework for carrying out monetary policy whereby
A) the central bank commits to a monetary growth rule. B) the central bank commits to achieving a publicly announced level of inflation. C) the central bank commits to achieving a target level of inflation which is never announced publicly. D) the central bank adopts a rigid target for inflation and ignores declines in output.
Refer to the graph shown.
If suppliers can restrict output from M to L, the price will:
A. rise from PM to PL. B. fall from PL to PM. C. fall from PM to PL. D. rise from PL to PM.
The long-run average cost curve shows
A) the lowest average cost of producing every level of output in the long run. B) where the most profitable level of output occurs. C) the average cost of producing where diminishing returns are not present. D) the plant size or scale that the firm should build.