The elasticity of labor demand does not depend on the:
A. elasticity of demand for the firm's product.
B. elasticity of labor supply.
C. possibility of and cost of substitution in production.
D. relative importance of the factor in the production process.
Answer: B
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The law of diminishing marginal returns describes changes in output when inputs change
Indicate whether the statement is true or false
The opportunity cost to society of producing one more unit of the good is
A. marginal cost. B. efficiency costing. C. the optimal cost. D. average cost.
Assume that a manufacturer of stereo speakers purchases $40 worth of components for each speaker. The completed speaker sells for $70. The value added by the manufacturer for each speaker is:
a) $110. b) $30. c) $40. d) $70.
Regulatory capital arbitrage is a means of
A) using borrowed funds to increase the returns that can be earned with a given amount of capital. B) specifying the amount of capital that financial institutions should hold based on the riskiness of their different assets. C) determining mortgage rates for sub-prime borrowers. D) changing the composition of assets in such a way as to lower the overall amount of capital a financial institution holds for a given level of assets.