The marginal rate of technical substitution is the ratio of
A. labor to the price of labor.
B. the marginal product of labor to the marginal product of capital.
C. capital to labor.
D. capital to the price of capital.
Answer: B
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Consider the following simplified sequence of exchanges. A logger sells an oak tree to a sawmill owner for $60. The sawmill mills it, and sells the boards to a woodworker for $80
The woodworker makes an oak bookcase out of the boards, and sells it to a retailer for $300. The retailer then sells you the bookcase for $500. As a result, GDP increases by A) $200. B) $300. C) $440. D) $500. E) $940.
Assume that both the demand curve and the supply curve for DVD players shift to the left but the supply curve shifts more than the demand curve. As a result,
A) both the equilibrium price and quantity of DVD players will decrease. B) the equilibrium price of DVD players will decrease; the equilibrium quantity may increase or decrease. C) the equilibrium price of DVD players may increase or decrease; the equilibrium quantity will increase. D) the equilibrium price of DVD players will increase; the equilibrium quantity will decrease.
The net present value of a project is calculated as
A) the future value of all cash inflows minus the present value of all outflows. B) the sum of all cash inflows minus the sum of all cash outflows. C) the present value of all cash inflows minus the present value of all cash outflows. D) None of the above
For a nondiscriminating monopolist, which of the following is false?
a. The monopolist produces where MR = MC. b. The monopolist's marginal revenue curve is the same as its demand curve. c. The monopolist will never produce in the inelastic range of its demand curve. d. A monopolist is more allocatively inefficient than a perfectly competitive firm. e. The monopolist produces where P > MC.