Suppose a single-input production function has initially increasing but eventually decreasing marginal product. In this case, the first order condition for the profit maximization problem
A. is necessary for identifying the profit maximizing production plan.
B. is sufficient for identifying the profit maximizing production plan.
C. is both necessary and sufficient for identifying the profit maximizing production plan.
D. is neither necessary nor sufficient for identifying the profit maximizing production plan.
Answer: D
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Which of the following is TRUE regarding the real wage rate? The real wage rate
I. is always greater than the money wage. II. measures the quantity of goods and services an hour's work can buy. A) only I B) only II C) both I and II D) neither I nor II
The difference between the Baumol-Tobin formulation of the demand for money and the Keynesian-Baumol formulation is that
A) the speculative demand is a function of income. B) the transaction demand is a function of interest rates as well as income. C) the transaction demand is a function of wealth. D) Both B and C are correct.
Total variable costs: a. Increase when quantity produced increases
b. Decrease when quantity produced increases. c. Sometime increase and sometime decrease when quantity produced increases. d. Can sometimes be constant over a substantial range of output.
An increase in the money supply will affect aggregate demand
A. only if the increase in the money supply causes interest rates to rise. B. if the increase in the money supply causes interest rates to fall and/or causes people to buy more goods and services. C. only if the increase in the money supply causes people to buy less goods and services. D. only if the increase in the money supply causes people to increase their saving.