Why do some firms use large amounts of capital and small amounts of labor while others use small amounts of capital and large amounts of labor?
What will be an ideal response?
The mix of resources used, such as large amounts of capital versus small amounts of capital, depends on economic efficiency. Economic efficiency is based on minimizing the value of the resources used, not the quantity. A firm will use the mix that produces output at the lowest possible cost, without regard to specific physical quantities or ratios of inputs. As the cost of capital decreases relative to the cost of other resources, capital-intensive production methods will become economically efficient and firms will avoid labor-intensive methods.
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An international organization created at the Bretton Woods conference in 1944 that helps coordinate international financial flows and can arrange short-term loans between countries is called the:
A) World Bank. B) International Monetary Fund. C) U.S. Treasury. D) U.S. Agency for International Development.
Which one of the following is an example of the circular flow of GDP and shows the interdependence of households and firms?
a. Households demand their resources from the firms in the resource market and, in turn, supply in the product market the goods and services produced by firms b. The firms go to the resource market to supply resources that households demand and, inin turn, provide households with the goods and services produced for the product market. c. Households supply resources to firms in the resource market and, in turn, demand in the product market the goods and services produced by the firms. d. The firms in the resource market pay to households in the form of wages, interest, rent, and profit—for resources demanded. e. The circuit is completed when the payments flow from households, through the product market, and to the firms for the goods and services they demand.
There are ways that policymakers could reduce the costs of inflation without reducing inflation
a. True b. False Indicate whether the statement is true or false
The Principle of Increasing Opportunity Costs states that:
A. opportunity costs increase when too little is produced. B. when increasing production, resources with the lowest opportunity costs should be used first. C. when increasing production, resources with the lowest opportunity costs should be used last. D. productive people do the hardest tasks first.