Firms will employ each input up to the point that its price equals its marginal revenue product.
Answer the following statement true (T) or false (F)
True
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The figure above shows Ronald's budget line. He has a weekly income of $20, which he spends on hotdogs and hamburgers. Now Ronald's income decreases to $10 per week and the price of a hotdog doubles
Ronald's budget line becomes ________ and ________. A) flatter; shifts rightward B) flatter; does not shift C) steeper; shifts rightward D) steeper; shifts leftward
Which of the following is NOT true about the supply of labor to the firm in a competitive labor market?
A) It is horizontal. B) It is perfectly elastic. C) It is equal to the marginal expenditure curve. D) It is upward sloping.
When oligopolistic firms in an industry form a cartel, then it is most likely that
A) both industry output and prices will increase. B) both industry output and prices will decrease. C) industry output will increase while prices will decrease. D) industry output will decrease while prices will increase.
When considering the running of a corporation, there is a principal-agent problem between shareholders and the CEO because
A. shareholders cannot observe all of the CEO's decisions. B. shareholders require the firm to pay a dividend. C. shareholders sign confidentiality agreements. D. the CEO is paid in part with stock options. E. shareholders want the firm to maximize the firm's share price while the CEO wants to maximize profits.