Suppose the MRP of the 49th worker at a firm is $25 and that the market wage rate is $15. We know that if this firm operates in perfectly competitive product and labor markets
A) the firm is paying wages above the minimum wages.
B) the firm's profits would increase if it fired some workers.
C) the firm would be more profitable if it hired more workers.
D) the firm should use more capital.
Answer: C
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Employing an additional 1 billion hours of labor increases real GDP by $12 billion. Employing another 1 billion hours beyond the first 1 billion increases real GDP by $11 billion
Hence we can conclude from this information that as employment increases, real GDP A) increases at an increasing rate. B) decreases at an increasing rate. C) decreases at a decreasing rate. D) increases at a decreasing rate. E) falls from $12 billion to $11 billion as more workers are hired.
Suppose real output falls in the aggregate economy. Which is correct?
A) A real business cycle theorist thinks that there was a negative shock to total factor productivity, and that the government should therefore increase expenditures. B) A New Keynesian thinks that the output gap has fallen, and central bank's interest rate target should rise. C) A real business cycle theorist thinks that total factor productivity has risen, and that the government should do nothing . D) none of the above.
A bond with a $90,000 face value sells at a $10,000 discount one year prior to maturity. What is the nominal interest rate paid by the bond?
a. 8.0%. b. 8.9%. c. 11.1%. d. 12.5%.
When there is a negative entry for unilateral transfers in the balance of payments, it means that
A) there must be an offsetting positive sign in the financial account. B) U.S. residents gave more to foreign residents than foreign residents gave to U.S. residents. C) U.S. residents purchased less services from foreign countries than foreign countries purchased from U.S. residents. D) U.S. residents purchased more services from foreign countries than foreign countries purchased from U.S. residents.