Suppose the marginal product of labor equals 1/L. If the firm can sell its output for $10 per unit, and the wage is $1 per unit, how many units of labor will the firm hire?
A) 0
B) 1
C) 10
D) 100
C
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Oatmeal is a normal good and cold cereal is a substitute for oatmeal. Raisins are a complement for oatmeal. Which of the following increases the demand for oatmeal?
A) an increase in the price of raisins B) a decrease in income C) a decrease in population D) an increase in the price of cold cereal
When net capital flows are positive,
A) net foreign investment is negative. B) capital inflows are greater than capital outflows. C) capital outflows are greater than capital inflows. D) A and B are both correct.
Two reasons why an economy might operate inside of its production possibilities frontier are
a. productive efficiency and technological change b. depressions and inflation c. recessions and productive inefficiency d. opportunity costs and substitutability of resources used in production e. productive inefficiency and a decrease in the state of technology