In the employment of any resource, a firm should
A) equate marginal revenue product with the cost of the additional resource.
B) hire each input unit that adds more to revenue than it adds to costs.
C) hire each input unit provided its marginal physical product is greater than zero.
D) A and B are both correct.
D
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Consumers maximize total utility within their budget constraint by
A) spending the same dollar amount for each good. B) buying the cheapest goods they can find. C) buying whatever they like the best. D) buying the goods with the largest marginal utility per dollar spent.
In the short-run macro model, an increase in government spending
a. may reduce real GDP b. partially crowds out private investment spending c. usually crowds out exports d. usually crowds out spending on services e. requires an increase in taxes
Government transfer paymentsare called "automatic stabilizers" because:
a. Government transfer paymentsare automatically countercyclical. b. Government transfer paymentsare automatically procyclical. c. Government transfer paymentsis automatically acyclical. d. None of the above.
When supply falls and demand remains the same, equilibrium price _______ and equilibrium quantity __________.
Fill in the blank(s) with the appropriate word(s).