Which of the following outcomes is consistent with a purely competitive market in long-run equilibrium?
A. Consumer and producer surplus will be maximized.
B. P = MC = lowest AVC.
C. The minimum willingness to pay equals the maximum acceptable price.
D. We would expect all of these to occur in the long run in a purely competitive market.
Answer: A
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As a firm hires more and more workers:
A) the value of marginal product of the additional workers eventually increases. B) the marginal product of the additional workers remains the same. C) the value of marginal product of the additional workers remains the same. D) the value of marginal product of the additional workers eventually decreases.
The kitchen manager at an Italian restaurant is deciding what assignments he should give to his two cooks, John and David. John can make 25 pizzas or 40 servings of pasta per hour and David can make 20 pizzas or 30 servings of pasta
Which of the following should be the manager's choice? A) Fire David because he is not as productive as John. John will do both jobs. B) John will make pizza because he has comparative advantage in making pizza. C) David will make pizza because he has comparative advantage in making pizza. D) John and David both will spend half their time making pizza and half their time making pasta because each has a comparative advantage in making pizza.
A fall in the price of farm land and farm prices in the early 1980s caused
a. farmers to borrow more heavily on that land to plant crops b. banks that had lent heavily to farmers to go bankrupt when the farmers were unable to repay their loans c. banks that had lent heavily to farmers to earn extraordinary profit when farmers repaid loans faster than usual d. banks to increase their loans to farmers until the price of farm land increased e. banks and farmers to get together to renegotiate their loans until the price of land and goods increased
For both Keynesians and monetarists to predict accurately the effects of a change in the money supply on the price level, they need to add ____ to their analysis
a. aggregate demand b. nominal GDP c. real GDP d. aggregate supply e. government spending