An economy has two workers, Paula and Ricardo. Everyday they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. To maximize total output, Paula should specialize in producing ________ while Ricardo should specialize in producing ________.
A. computers; shirts
B. shirts; shirts
C. computers; computers
D. shirts; computers
Answer: D
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Suppose a monopsonist currently employs 100 workers at a wage of $400 per week. If the firm wants to expand employment to 110 workers, and the 110th worker will only work for $450 per week, what is the approximate marginal factor cost of the 110th worker?
a. $450 per week. b. $5,500 per week. c. $950 per week. d. $9,500 per week. e. $49,500 per week.
Other things constant, an increase in the price level will: a. shift the money demand curve to the right
b. shift the money demand curve to the left. c. increase the quantity of money people want to hold. d. decrease the quantity of money people want to hold. e. have no impact on the money demand curve.
The value of the expenditure multiplier in the long run is
a. 1 b. 0 c. -1 d. equal to the MPC e. equal to the 1/MPC
Assume that an industry requires a very specialized technology that involves high start-up costs for new firms no matter what level of output they produce. In the long run, at low levels of output, these firms will tend to exhibit
a. diminishing marginal returns b. increasing marginal returns c. diseconomies of scale d. constant returns to scale e. economies of scale