If a firm uses only capital and labor as inputs, then what should the firm do at a given rate of production if the marginal product of labor per last dollar spent is lower than the marginal product of capital per last dollar spent?
A. The firm should decrease the quantity of capital and increase the quantity of labor.
B. The firm should increase the quantity of capital and reduce the quantity of labor.
C. The firm should decrease both the quantity of capital and the quantity of labor.
D. The firm should increase both the quantity of capital and the quantity of labor.
Answer: B
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The difference between fiscal policy and monetary policy is that
a. fiscal policy is macroeconomic policy and monetary policy is microeconomic policy b. monetary policy is macroeconomic policy and fiscal policy is microeconomic policy c. fiscal policy involves regulation of natural monopolies and monetary policy involves the provision of public goods d. monetary policy involves regulation of the money supply and fiscal policy involves government spending and taxing e. fiscal policy involves the promotion of competition and monetary policy involves collecting money to pay for taxes
Commercial policy is a government policy aimed at influencing:
a. the operation of commercial banks. b. domestic trade flows. c. domestic private corporations. d. international trade flows. e. the operation of capital markets.
All of the following conditions, except one, will necessarily be satisfied when a perfectly competitive firm is in short-run equilibrium. Which condition is the exception?
a. marginal revenue equals average total cost b. marginal cost crosses marginal revenue from below c. marginal revenue equals price d. price equals marginal revenue e. profit is maximized or loss is minimized
Suppose the market-clearing price of milk is $3.00 per gallon, but the diary industry persuades the government to establish a legally-mandated price support at $4.00 per gallon. The newly legislated price tends to
A) reduce the demand for milk. B) increase the production of milk. C) create a shortage of milk. D) decrease the price of milk products.