Answer the following statements true (T) or false (F)
1. Derived demand for a resource stems from the demand for the good or service it produces.
2. The MRP is the additional revenue obtained by producing one more unit of output.
3. In perfect product competition, the output price is fixed to the firm.
4. MRP declines because MP declines.
5. Firms hire workers up to the point where MRP = the wage rate.
1. TRUE
2. FALSE
3. TRUE
4. TRUE
5. TRUE
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How is the impact of expansionary monetary policy different in an open economy than in a closed economy?
What will be an ideal response?
A bank finds itself short of required reserves and therefore borrows from another commercial bank. The interest rate on this loan is
a. zero. b. the prime rate. c. the discount rate. d. the federal funds rate. e. the required reserve ratio.
In an uncertain world, private investors
a. always make decisions that lead to economic profit. b. never make decisions that generate economic losses. c. sometimes make decisions that lead to economic losses. d. rarely invest in human capital.
Price controls
a. always produce a fair outcome. b. always produce an efficient outcome. c. can generate inequities of their own. d. All of the above are correct.