In monopolistically competitive markets, resources are:
A. overallocated because long-run equilibrium occurs where price exceeds marginal cost.
B. underallocated because long-run equilibrium occurs where price exceeds marginal cost.
C. overallocated because long-run equilibrium occurs where marginal cost exceeds price.
D. underallocated because long-run equilibrium occurs where marginal cost exceeds price.
Answer: B
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Use the following diagram to answer the next question.
Which of the following would cause a move from MS1 to MS2?
A. The banking system decides to hold less excess reserves and make more loans. B. The federal funds rate increases. C. The discount rate is increased by the regional Federal Reserve banks. D. The Federal Open Market Committee decides to sell bonds.
Suppose that you and two friends have an opportunity to purchase a pizza restaurant. Each of you would put up $75,000 . The revenue from the restaurant is expected to remain $200,000 per year for the next several years
The costs (not including the opportunity costs of your investment) of operating the restaurant are expected to remain steady at $185,000 for the next several years. The current market rate of interest is 7 percent per year. Should you go in on this deal? Explain.
One of the major motivations for labor resistance to productivity enhancing changes in a production process is the resulting threat to job security
Indicate whether the statement is true or false
For given inputs of labor and capital, if technology is better, labor productivity will be
a. higher. b. lower. c. unchanged. d. characterized by increasing returns to scale.