When marginal revenue product of an input is less than its price, the producers should use less of the input.
Answer the following statement true (T) or false (F)
True
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The requirement that certain professionals possess a license in order to work in a particular market has the effect of reducing the supply of those services, which in turn causes:
A) price and the profits of firms in the market to increase. B) price and the profits of firms in the market to decrease. C) price to increase and the profits of firms in the market to decrease. D) price to decrease and the profits of firms in the market to increase.
If the United States can make auto parts in less time than Mexico, then why are U.S. auto parts made in Mexico?
a. Trade is based on comparative advantage, not absolute advantage. b. Mexico has a larger labor force and more manufacturing sites. c. North American manufacturing is evenly divided based on treaties. d. Mexican suppliers have an absolute advantage over U.S. companies.
If the price of a good increases by 10 percent, its quantity demanded drops by 50 percent. The price elasticity of demand is:
A. 1.0 B. 0.2 C. 5.0 D. 2.0
Assume that business investment spending rises, and the increase is funded by greater borrowing in the capital markets. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the GDP Price Index and monetary base in the context of the Three-Sector-Model? a. The GDP Price Index rises and monetary base rises
b. The GDP Price Index rises and monetary base falls. c. The GDP Price Index and monetary base fall. d. The GDP Price Index and monetary base remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.