Say a firm that sells its product at a price of $40 is using 20 units of capital. If the marginal product of the last unit of capital used was 50, and the constant rental rate of capital is $2,000, then this firm should
A. continue to use same units of capital.
B. acquire more capital.
C. decrease its output.
D. decrease the amount of capital.
Answer: A
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Empirical evidence refers to:
A) a set of facts established by observation and measurement. B) the process of developing and testing models. C) a proposed explanation for a phenomenon. D) a simplified representation of reality.
If the MPC is 0.6 and if government purchases and net taxes both increase by $20 billion, by how much will equilibrium output change?
a. It will increase by $80 billion. b. It will increase by $20 billion. c. It will not change because the changes in government purchases and net taxes will cancel each other out. d. It will decrease by $20 billion. e. It will decrease by $80 billion.
Jennifer lives in a home that was newly constructed in 2011 for which she paid $240,000 . In 2014 she sold the house for $260,000 . Which of the following statements is correct regarding the sale of the house?
a. The 2014 sale increased 2014 GDP by $260,000 and had no effect on 2011 GDP. b. The 2014 sale increased 2014 GDP by $20,000 and had no effect on 2011 GDP. c. The 2014 sale increased 2014 GDP by $260,000; furthermore, the 2014 sale caused 2011 GDP to be revised upward by $20,000. d. The 2014 sale affected neither 2014 GDP nor 2011 GDP.
According to the Clean Air Act, a new firm in the covered industry is required to:
A. obtain a permit to pollute and at least match the most effective system existing in the industry. B. obtain a permit to pollute. C. at least match the most effective system existing in the industry. D. None of the statements are correct.