The expansion path
A. is the collection of all input combinations at which the marginal rate of technical substitution equals the input price ratio.
B. shows how the cost-minimizing input choices change as the firm's output level changes.
C. shifts if the input price ratio changes.
D. both a and c
E. all of the above
Answer: E
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What is the relationship between the income effect and the substitution effect for a normal good and what is it for an inferior good?
What will be an ideal response?
An exogenous variable is typically ________
A) calculated by the model B) only used to conduct policy analysis C) explained inside the model D) disregarded in economic models E) none of the above
If the economy were producing at point E and moves to point D,
Hypothetical Production Schedule for a Two-Product Economy
A. resources will shift from producing capital goods to producing consumer goods.
B. resources will shift from producing consumer goods to producing capital goods.
C. more capital goods can be produced without any sacrifice in consumer goods production.
D. more consumer goods can be produced without any sacrifice in capital goods production.
Select the normative statement that completes the sentence: If wages rise more rapidly than productivity:
A. profits will fall. B. workers will earn 3/4 of GDP. C. the rate of inflation increases. D. policymakers should impose a wage ceiling.