Ernie's Sushi-On-A-Stick is a perfectly competitive firm currently employing 75 workers. The marginal revenue product of the 75th worker is $9.00 per hour. The wage rate is $12.00 per hour. To increase profits, this firm should
A. continue hiring 75 workers because the firm earns a surplus of $3.00 on each worker hired.
B. increase the price of sushi-on-a-stick so that the marginal revenue product increases to $12.00 per hour.
C. decrease employment until the MRP of labor equals $12.00.
D. increase employment until the MRP of labor equals $12.00.
Answer: C
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A production possibilities frontier will shift outward if there is an improvement in technology
a. True b. False
Which of the following is true of a production possibilities curve?
a. It reveals the maximum amount of any two goods that can be produced from a fixed quantity of resources. b. It reveals the ideal level of technology for a country. c. It assumes that the prices of the two products are equal. d. For a country that could produce many different goods, it shows which two goods are most important to produce.
Assume that the central bank purchases government securities in the open market. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real GDP and current international transactions in the context of the Three-Sector-Model?
a. Real GDP rises, and current international transactions become more positive (or less negative). b. There is not enough information to determine what happens to these two macroeconomic variables. c. Real GDP rises, and current international transactions remain the same. d. Real GDP falls, and current international transactions become more negative (or less positive). e. Real GDP and current international transactions remain the same.
Efficiency is illustrated by
a. both the production possibilities frontier and the circular-flow diagram. b. neither the production possibilities frontier nor the circular-flow diagram. c. the production possibilities frontier only. d. the circular-flow diagram only.