A firm that is hiring labor in a purely competitive labor market and selling its product in a purely competitive product market will maximize its profit by hiring labor until:
A. marginal revenue product is zero.
B. marginal revenue product exceeds marginal resource (labor) cost by the greatest amount.
C. marginal resource cost is zero.
D. marginal revenue product equals marginal resource (labor) cost.
Answer: D
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According to the Keynesian consumption function, if disposable income
a. increases, planned saving will increase. b. increases, planned consumption will increase. c. falls, planned saving will increase. d. increases, both planned saving and planned consumption will increase.
With the technological developments in the twenty-first century, productivity growth is no longer an important factor in economic well-being.
Answer the following statement true (T) or false (F)
Taxes on labor tend to encourage second earners to stay at home rather than work in the labor force
a. True b. False Indicate whether the statement is true or false
Policy is conducted via a rule if policymakers
a. use monetary and fiscal policy only when the political situation dictates it. b. set monetary and fiscal policy according to multiple but predetermined goals. c. a free to respond to unexpected changes in economic conditions. d. announce in advance how they will respond to changes in economic conditions.