Which of the following statements is true?
A. In the short run all inputs are fixed.
B. Diminishing returns to labor means that adding one more worker will decrease output.
C. In the long run a firm is making the optimal input choice when the marginal rate of technical substitution is equal to the input price ratio.
D. all of the above
E. none of the above
Answer: C
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Adverse selection refers to the
A) use of statistical discrimination in making loans. B) possession of information by one party in a financial transaction not known by the other party. C) likelihood that a potential borrower may use the funds that he receives for unworthy, high risk projects. D) possibility that the borrower may engage in riskier behavior after the loan is obtained.
Even if, on average, better-educated individuals can earn more money, all persons with more schooling will not necessarily have higher incomes
Indicate whether the statement is true or false
If a firm hires labor for $6,000, pays rent of $2,000, buys raw materials for $10,000 from another firm, earns profits of $800, and sells its output for $25,000, the value added by the firm is _____
a. $6,200 b. $9,000 c. $15,000 d. $18,000 e. $18,800
An increase in the price of a resource would cause: a. producers to substitute other inputs for the resource
b. consumers to substitute other products for goods that increase in price as the result of the higher resource price. c. an increase in the demand for products that use the resource intensely. d. both (a) and (b) to occur.