In the short run, a perfectly competitive firm's most profitable level of output is where:
a. total revenue minus total cost is at a maximum.
b. marginal cost equals marginal revenue.
c. Both of the above.
d. Neither of the above.
c
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Suppose that a technological advancement substantially reduces the cost of laser eye surgery. This would cause the equilibrium
A) quantity of laser eye surgery to decrease. B) quantity of laser eye surgery to increase. C) price of technology to increase. D) quantity of technology to decrease.
In a labor-market pooling equilibrium with high-skill and low-skill workers and where a costly educational degree is used as a signaling device, all else equal, an increase in the wage differential between high- and low-skill workers leads to
A) an increase in the required minimum share of high-skill workers. B) a decrease in the required minimum share of high-skill workers. C) no change in the required minimum share of high-skill workers. D) None of the above answers are correct.
Consider the budget constraint between "spending today" on the horizontal axis and "spending a year from today" on the vertical axis. Suppose that you have $100 today and expect to receive $100 one year from today. Your money market account pays an annual interest rate of 25%, and you may borrow money at that interest rate. Suppose now that the interest rate increases to 40%. What happens to the
slope of your budget constraint relative to when the interest rate was 25%? The slope a. becomes steeper. b. becomes flatter. c. doesn't change because the budget constraint shifts in parallel to the original budget constraint. d. doesn't change because the budget constraint shifts out parallel to the original budget constraint.
Good that cost one half dollar in the U.S. cost one euro in Germany, the real exchange rate would be computed as how many German goods per U.S. goods?
a. one half b. one half the price of the U.S. goods c. one half the number of euros it takes to buy a U.S. dollar d. None of the above is correct.