Assume that a perfectly competitive firm faces a fixed wage rate of $4 and a constant per-unit cost of capital of $2. If the marginal product of labor and capital are 16 and 6, respectively, then to maximize profits the firm should
A) use relatively more labor.
B) use relatively less labor.
C) increase all inputs proportionately.
D) decrease all inputs proportionately.
A
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Gross domestic product is the money value of manufacturing production in a year.
Answer the following statement true (T) or false (F)
The above figures show the market for hamburger meat. Which figure(s) shows the effect of a nation-wide strike by butchers and meat-packers?
A) Figure B B) Figure C C) Figure D D) Figures B and C
Assuming that the demand for a good has increased and the supply of a good has decreased by the same amount, then: a. The change in price is determinate but the change in quantity is indeterminate. b. The change in quantity is determinate but the change in price is indeterminate. c. Both the change in price and the change in quantity will be indeterminate
d. Neither the change in price nor the change in quantity will be indeterminate.
Which of the following variables is left out of the simple economic model of the firm?
a. the marginal cost of production b. consumer tastes and preferences c. the fact that many firms actually earn profits d. the entrepreneurial decision-making process