Which of the following is FALSE regarding the general rule for hiring?
A. Virtually every optimizing rule in economics involves comparing marginal benefits with marginal cost.
B. The firm hires workers up to the point at which the additional cost associated with hiring the last worker is equal to the additional revenue generated by that worker.
C. The benefit from added workers is extra output and consequently more revenues.
D. If any firm hired fewer workers over time, profits would definitely increase at that firm.
Answer: D
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According to rational expectations,
A) the Fed should focus its policies on interest rates. B) the Fed should focus its policies on inflation. C) the Fed should focus its policies on unemployment. D) the Fed is unable to influence real economic activity.
________ refers to the time needed to identify a macroeconomic problem and assess its seriousness
a. Decision-making lag b. Implementation lag c. Recognition lag d. Effectiveness lag
In Econland autonomous consumption equals 700, the marginal propensity to consume equals 0.80, net taxes are fixed at 50, planned investment is fixed at 100, government purchases are fixed at 100, and net exports are fixed at 40. Autonomous expenditure equals:
A. 990. B. 890. C. 900. D. 940.
If the inflation rate is larger than the nominal interest rate, the real interest rate is
A. zero. B. positive. C. negative. D. either positive or zero.