Applied to perfectly competitive labor markets, the marginal principle tells firms to hire workers until:
A. the marginal revenue product of the last worker hired equals the wage.
B. marginal productivity begins to diminish.
C. average total costs are minimized.
D. the price of the product equals the wage of the worker.
Answer: A
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Price discrimination by a monopoly
A) increases consumer surplus. B) decreases consumer surplus. C) increases the firm's profit. D) Both answers B and C are correct.
In the long-run ISLM model and with everything else held constant, the long-run effect of an expansionary monetary policy is to
A) increase real output and the interest rate. B) not change either real output or the interest rate. C) increase real output and leave the interest rate unchanged. D) increase the interest rate and leave real output unchanged.
Appendix: An incentive-compatible revelation mechanism is
a. self-enforcing b. always multi-period c. too complicated to influence decisions d. prevalent in vertically integrated businesses e. not adopted by franchise businesses
Give a complete and concise definition of each of the following terms. a. Deliberately erected entry barriers b. Inefficiency of monopoly c. Price discrimination d. Profit-maximizing equilibrium for a monopolist
What will be an ideal response?