A firm uses two inputs, A and B. At its optimal choice of input proportions,
a. MRP of A = MRP of B.
b. MRPA/PA = MRPB/PB.
c. MPP of A = MPP of B.
d. All of the above are correct.
b
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Rising government expenditure, through its effect on the real interest rate, ________ v* and thus ________ net investment
A) raises, stimulates B) raises, depresses C) lowers, stimulates D) lowers, depresses
If it becomes more expensive for firms to hold excess capital and labor, the multiplier will
A. increase. B. remain unchanged. C. decrease. D. either increase or decrease depending on the value of the MPC.
A consumer is likely to avoid adverse selection and get a high-quality lunch at
A) a snack bar at a traveling carnival. B) a vendor who parks her cart at a different location every noon. C) a restaurant in the center of a business district. D) a restaurant located next door to Disneyland.
If the demand curve for money were horizontal at some interest rate, an increase in the money supply
A) would lower the interest rate. B) would increase the rate of inflation. C) would be highly effective in reducing inflation. D) would not change the interest rate