"The firm hires the factor up to the point where the value of the factor's marginal product is equal to the factor's price." This statement applies to which factor of production?
a. labor only
b. land only
c. capital only
d. land, labor, and capital
d
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Suppose the economy is producing above potential GDP and the Federal Reserve implements the appropriate change in monetary policy, but not until after the economy has started to slow down on its own. In this situation there is a real danger that
A) the Fed's expansionary policy will result in too small of an increase in GDP. B) the Fed's expansionary policy will result in too large of an increase in GDP. C) the Fed's contractionary policy will result in too large of a decrease in GDP. D) the Fed's contractionary policy will result in too small of a decrease in GDP.
List the various arguments against free trade
What will be an ideal response?
A monopoly is a firm that:
A. is the sole producer of a good or service with no close substitutes. B. is the sole producer of a good or service with many close substitutes. C. is the producer of a good or service with just a few large competitors. D. produces a good or service that is identical to many others sold in the market.
In perfect competition, one result of the model was that there were no economic profits in the long run. In a monopoly, the firm typically earns a positive economic profit. Why is there this difference?
What will be an ideal response?