Suppose the marginal product of labor is 8 and the marginal product of capital is 2. If the wage rate is $4 and the price of capital is $2, then in order to minimize costs the firm should use:
A. three times more capital than labor.
B. more capital and less labor.
C. more labor and less capital.
D. none of the answers are correct.
Answer: C
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Refer to the scenario above. If Frank discounts delayed utilities with a weight of 9/10, then which of the following statements is true?
A) He will eat both hotdogs and ice cream. B) He will eat hotdogs but avoid ice cream. C) He will eat ice cream but avoid hotdogs. D) He will avoid consuming both hotdogs and ice cream.
Bargaining costs are generally high in cases involving environmental externalities because:
a. there are strong incentives to be a free rider. b. many individuals may be affected by the externalities. c. it is difficult to measure the costs of the externalities. d. all of the above.
Macroeconomic equilibrium is always good, because:
a. It gives the nation a breather and allows it to catch up with itself economically. b. Because it is the only place where actual demand equals actual supply. c. Because it is the only place where planned demand equals planned supply. d. Actually, macroeconomic equilibrium can be either good or bad. It is not always good. e. All of the above.
The following are national income account data for a hypothetical economy in billions of dollars: government purchases ($1130), personal consumption expenditures ($4800), imports ($370), exports ($240), and gross private domestic investment ($1150). Personal consumption expenditures are approximately what percentage of this economy?
A. 69 percent. B. 75 percent. C. 65 percent. D. 60 percent.