Ajax has just discovered that the marginal revenue product generated by the last worker hired was $125 while the marginal factor cost was $85. What should Ajax do?
A) Leave the level of production unchanged.
B) Increase the amount produced.
C) Reduce the amount produced.
D) Collect more information before making a decision.
B
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Voting against ones preferences in the initial round of a runoff election in order to prevent the selection of an undesirable alternative in the final round is called
A) ballot manipulation. B) strategic voting. C) naive voting. D) the voting paradox.
Suppose the equilibrium price in a perfectly competitive industry is $10 and a firm in the industry charges $12. Which of the following will happen?
A) The firm will sell more output than its competitors. B) The firm will not sell any output. C) The firm's revenue will increase. D) The firm's profits will increase.
If the Fed sells $10 million in bonds to a bank, and the legal reserve requirement is 20 percent, then the banking system will
a. decrease the money supply by $10 million b. decrease the money supply by $40 million c. decrease the money supply by $50 million d. decrease the money supply by $2 million e. increase the money supply by $50 million
Which of the following is an important insight of Keynesian analysis?
a. When an economy is in a recession, lower interest rates and lower wage rates will quickly direct the economy back to full employment. b. When widespread unemployment is present, increases in aggregate demand will exert a larger impact on real output than when the economy is operating at or near full employment. c. When an economy is in a recession, it makes sense to increase taxes and reduce government expenditures. d. A balanced budget is the key to maintenance of full employment.