Suppose at the current level of labor used, MRP = $100 and MFC = $50. To maximize profits, the firm should
A) hire more labor.
B) reduce the level of labor.
C) maintain the current level of labor.
D) shut down.
Answer: A
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Horizontal summing of individual demands yields
a. the market demand for a private good b. the market supply of a private good c. the market demand for a public good d. the market supply of a public good
In the above figure, after the second worker is hired, the marginal product of labor is
A) increasing. B) diminishing. C) constant. D) zero.
The manager of Slick Lens, a sunglasses manufacturer, notices that the cost to purchase lenses for their sunglasses in the spot market has increased. As a result of the change, which of the following is true?
A) The manager has more of an incentive to integrate backward. B) The manager has less of an incentive to integrate backward. C) The manager has more of an incentive to integrate forward. D) The manager has less of an incentive to integrate forward.
If a market is in long-run equilibrium, which of the following conditions will be present in a competitive price-taker market but absent from a competitive price-searcher market?
a. P = ATC b. MR = MC c. P = MC d. MR < P