According to the exchange model of production, when two firms are in competitive equilibrium
A. both firms will demand the same quantities of labor and capital.
B. the MRTS for two firms will be equal.
C. the prices of labor and capital will be at the lowest possible level.
D. the marginal products of capital and labor for each firm will be equal.
Answer: B
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The per-worker production function in the Solow model assumes
A) constant returns to scale and increasing marginal productivity of capital. B) constant returns to scale and diminishing marginal productivity of capital. C) increasing returns to scale and diminishing marginal productivity of capital. D) decreasing returns to scale and diminishing marginal productivity of capital.
A new technological innovation would increase
a. the labor force. b. labor hours worked. c. labor productivity. d. population growth.
An unregulated paper firm that pours waste into a waterway
A. is producing at a quantity where marginal social cost is greater than marginal social benefit.. B. is producing at a quantity where marginal social benefit is greater than marginal social cost. C. is producing the social optimal quantity. D. has taken social cost into account.
The only way that a society can produce outside the production possibilities curve is
A) through economic growth. B) by producing efficiently. C) by obeying the Law of Increasing Additional Cost. D) to use the concept of opportunity cost.