When the marginal revenue product of an input is less than its price, the
A. producer should expand the use of that input.
B. price of the input will automatically rise in a free market.
C. producer should reduce the use of that input.
D. marginal physical product of that input must be below its average physical product.
Answer: C
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If a firm has excess capacity, it means
A) that the firm's long-run average cost of producing a given quantity exceeds its short-run cost of producing that same quantity. B) that the firm's quantity supplied exceeds its quantity demanded. C) that the firm expends too much of its resources on advertising its product without seeing an appreciable increase in sales. D) that the firm is not producing its minimum efficient scale of output.
The size of the spread that a dealer will quote for a foreign exchange transaction will vary depending on
A) the degree of market volatility at the time. B) the degree of risk associated with a particular currency. C) the size of the market for the currency being traded. D) All of above.
Financial institutions that accept deposits and make loans are called
A) exchanges. B) banks. C) over-the-counter markets. D) finance companies.
The ________ nature of patents attempts to balance the social gain from the product against the ________.
A) temporary; competitive firm's economic profit from the product B) permanent; competitive firm's economic profit from the product C) temporary; deadweight loss to society D) permanent; deadweight loss to society