To minimize costs, a firm should use more labor and less capital if the product derived from the last dollar spent on labor is ________ the product derived from the last dollar spent on capital.
A. greater than
B. less than
C. equal to
D. either greater than or less than
Answer: A
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For patents to be effective
A) small networks. B) network externalities must be realized. C) property rights need to be enforced. D) there needs to be fewer economies of scope.
What does Keynes’ law state?
a. Supply creates its own demand. b. Supply and demand always intersect. c. Demand creates its own supply. d. Government determines supply and demand.
What happens to a production possibilities frontier (with capital goods on the vertical axis and consumption goods on the horizontal axis) when there is technological improvement?
a. The entire frontier shifts outward. b. The upper part shifts outward while the lower part shifts inward. c. Nothing; there is no movement of the frontier. d. The entire frontier shifts inward. e. The lower part of the curve shifts outward while the upper part shifts inward.
Suppose the United States chose to legalize the production and use of marijuana, but also decided to put a tax on the good (with the tax paid by producers). After doing so, suppose that the price that consumers paid rose, and the amount that growers got to keep fell. This would
A. indicate that the demand-side effect was smaller than the net supply-side effect. B. be shockingly counter-intuitive, because there would be no supply-and-demand model that could explain it. C. suggest that the supply curve is vertical. D. indicate that the demand-side effect was greater than the supply-side effect.