If the firm is using only one variable input, explain why the condition W = MRPL is thesame condition as P = MC
What will be an ideal response?
In both cases, the firm compares costs with potential revenues. As long as the wage equals the marginal revenue product of labor, the additional revenue just covers the additional costs of hiring labor and the firm is maximizing profits. By producing where price equals marginal cost, the firm is producing up to the point where additional costs equal additional revenues.
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The most efficient way to encourage the growth of an infant industry is through
A) a voluntary export restraint. B) a tariff. C) a subsidy. D) an import quota.
Consumers value the product-specific services for a new smartphone at $30 and the marginal cost to the retailers for providing the product-specific services is $40. From the manufacturer's perspective, a resale price maintenance agreement ________ be successful as it will ________ the equilibrium quantity sold.
A) will not; decrease B) will; increase C) will not; increase D) will; decrease
Declining-block quantity discrimination makes sense if
A) buyers of smaller quantities are more price sensitive than buyers of larger quantities. B) buyers of smaller quantities are less price sensitive than buyers of larger quantities. C) demand for the good is perfectly elastic. D) the lower price for larger quantities encourages all consumers to purchase the larger quantity.
A move from J to K best represents a
A. change in quantity demanded.
B. change in demand.
C. increase in demand.
D. decrease in demand.