In the employment of any resource, a firm should
A. hire each input unit that adds more to revenue than it adds to costs.
B. equate marginal revenue product with the cost of the additional resource.
C. hire until MRP equals MFC.
D. All of these are correct.
Answer: D
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Define and distinguish between final goods and intermediate goods
What will be an ideal response?
A merger between two firms that produce identical goods would be called
A) a horizontal merger. B) a vertical merger. C) a Lerner merger. D) a duopoly.
Suppose the government is auctioning the right for a company to mine for gold in a government-owned region of the country. Further suppose that the government has information regarding the amount of gold that is likely to be found in the region, but the companies bidding for the rights do not have this information. This is an example of ________.
A) screening B) the principal-agent problem C) the lemons problem D) asymmetric information
The aggregate demand curve will shift outward and to the right when the Federal Reserve undertakes which of the following monetary policies?
a. Open market purchases of government securities b. An increase in the discount rate c. An increase in the reserve requirement d. A reduction in loans to the U.S. Treasury e. A more lenient supervision of savings and loan institutions