A firm is currently hiring capital and labor so that MPL/PL < MPK/PK. If the firm wishes to maximize profits it should hire
A. more labor and less capital.
B. less labor and less capital.
C. less labor and more capital.
D. more capital and more labor.
Answer: C
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Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher
Taxes can yield the efficient level of pollution if the tax is set equal to the
A) marginal benefit of pollution. B) marginal external cost of the pollution. C) marginal social cost of the pollution. D) equilibrium price of the pollution.
Which of the following is correct?
A) There is no firm mathematical relationship between marginal utility and total utility. B) Total utility is equal to the change in marginal utility from consuming an additional unit of a product. C) If marginal utility is diminishing and is a positive amount, total utility will increase. D) If marginal utility is diminishing, total utility must also be diminishing.
If the U.S. has a capital account surplus, it means that
A. foreigners purchase more of U.S. assets than U.S. residents purchase foreign assets. B. U.S. exports of capital goods exceed its imports of capital goods. C. U.S. residents purchase more foreign assets than foreigners purchase U.S. assets. D. the quantity supplied of U.S. financial assets exceed the quantity demanded.