An expected increase in the prices of consumer goods in the near future will:
A. Decrease (or shift left) in aggregate demand now
B. Increase (or shift right) in aggregate demand now
C. Decrease in the quantity of real output demanded (or movement up along AD)
D. Increase in the quantity of real output demanded (or movement down along AD)
B. Increase (or shift right) in aggregate demand now
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A firm is employing capital and labor such that the marginal product of capital is 30 and the marginal product of labor is 10
If the price of a unit of capital is $50 and the price of a unit of labor is $10, is the firm minimizing its costs? If not, can you recommend a change for the firm to make in its relative amounts of labor and capital used? Explain.
Government spending on a transfer payment is illustrated by
a. interstate highways b. elementary and high school education c. community colleges d. land-grant universities e. agricultural subsidies
An example of an explicit cost of production would be the
a. cost of forgone labor earnings for an entrepreneur. b. lost opportunity to invest in capital markets when the money is invested in one's business. c. lease payments for the land on which a firm's factory stands. d. Both a and c are correct.
In the absence of externalities, what can be said about the invisible hand of the marketplace?
a) It induces people to act in a matter inconsistent with self-interest. b) It leads to a market outcome that maximizes total benefit to society. c) It increases the transaction costs of contracting between parties in an exchange. d) It is unable to resolve inherent inefficiencies in market system.