A firm's choice about how much physical capital to employ differs from its choice of how much labor to employ because
a. the firm has to pay for its capital
b. the productivity of labor depends on the firm's production function
c. firm must compare the marginal costs and benefits of acquiring more capital
d. firms do not own the labor they employ, but they frequently purchase capital outright
e. labor is productive but capital is not
D
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According to benefit-cost analysis
a. identification of the “acceptable” risk level is based on the criterion of allocative efficiency b. the efficient risk level is found where the MSB and MSC of risk reduction are equal c. the risk level associated with the maximum difference between TSB and TSC of risk reduction is allocatively efficient d. all of the above e. none of the above
Endogenous variables tend to be less volatile than exogenous ones
Indicate whether the statement is true or false
Suppose that an MBA degree creates no externality because the benefits of an MBA are captured by the student in the form of higher wages. If the government offers subsidies for MBAs, then which of the following statements is correct?
a. The equilibrium quantity of MBAs will equal the efficient quantity of MBAs. b. The equilibrium quantity of MBAs will be greater than the efficient quantity of MBAs. c. The equilibrium quantity of MBAs will be less than the efficient quantity of MBAs. d. The tuition paid by the student would be exceed the efficient amount.
If the demand for cigarettes is highly inelastic, this indicates that:
A. higher cigarette prices will increase the demand for cigarettes. B. the price elasticity coefficient of cigarettes exceeds 1. C. the price elasticity coefficient of cigarettes equals 1. D. the quantity of cigarettes purchased by consumers is not very responsive to a change in the price of cigarettes.