Suppose at the current level of labor used, MRP = $20 and MFC = $20. To maximize profits, the firm should
A) hire more labor.
B) reduce the level of labor.
C) maintain the current level of labor.
D) shut down.
Answer: C
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When price was 5, quantity demanded was 10. When price increased to 6, quantity demanded decreased to 9. Therefore, when price increased, total revenue
A. decreased from 54 to 50, indicating that demand is inelastic. B. decreased from 54 to 50, indicating that demand is elastic. C. increased from 50 to 54, indicating that demand is inelastic. D. increased from 50 to 54, indicating that demand is elastic.
In the long run in a monopolistic competitive industry,
a. economic profits will be positive. b. price will be driven to zero. c. the firm will not operate where MR = MC. d. economic profit will be zero. e. price will exceed average cost.
Sticky wages and input prices can explain why profits change along a short run aggregate supply curve
a. True b. False Indicate whether the statement is true or false
The U.S. economy in 2009 was characterized by an excess level of output. This corresponds to a recessionary gap
a. True b. False Indicate whether the statement is true or false