If a firm faces perfectly competitive product and factor markets and the marginal product of labor and capital are 4 and 9, respectively, while the wage rate is $2 and the rental rate on capital is $4, the firm should
A) use relatively more labor.
B) use relatively less labor.
C) increase all inputs proportionately.
D) decrease all inputs proportionately.
Answer: B
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The total product curve shows the relationship between total product and
A) cost. B) the quantity of labor. C) the average product. D) the marginal product. E) the marginal cost.
Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico. This subsequently drove up natural gas, gasoline, and heating oil prices. As a result, this should
A) shift the short-run aggregate supply curve to the right. B) shift the short-run aggregate supply curve to the left. C) move the economy down along a stationary short-run aggregate supply curve. D) move the economy up along a stationary short-run aggregate supply curve.
If a firm is producing an output level for which the market price exceeds the firm’s marginal cost,
a. consumers would be willing only to pay a price lower than what it costs the firm to produce another unit. b. consumers would be willing only to pay a price equal to what it costs the firm to produce another unit. c. consumers would be willing to pay a price greater than what it costs the firm to produce another unit. d. consumers would be willing only to pay a price equal to or lower than what it costs the firm to produce another unit.
Let M = 36, k = 3, Ls = W/P, MPN = L-1/2 and Y = 2L1/2 . Calculate the labor demand curve, the aggregate demand curve, and the equilibrium values of the real wage, labor, output, and the price level
What will be an ideal response?