In arriving at the quantity of output and price of its product, a company
A. chooses both price and quantity, since it understands its demand relationship.
B. cannot set price or quantity; this is done by the market.
C. makes two separate decisions about quantity and product price.
D. can set price but quantity is determined by market demand.
Answer: D
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The condition in circular-flow models whereby firms purchase all the goods not purchased by households is that
A) inventory investment is zero. B) saving is zero. C) fixed investment is zero. D) consumption equals investment. E) investment equals saving.
From Equation (7.1 ) in the book, the short-run marginal cost of production is MC = w/MPL. Based on this equation, which of the following statements is NOT true?
A) If the marginal product of labor is constant, then MC is constant. B) If the marginal product of labor is a concave curve, then the MC curve is also concave. C) If the marginal product of labor is a concave curve, then the MC curve is U-shaped. D) MC increases as the marginal product of labor declines.
The price of one nation's currency in terms of the currency of another nation is called the
A) IMF rate. B) fed funds ratio. C) exchange rate. D) discount rate.
Noncompeting groups of workers are the result of:
A. differences in the age-earnings profiles of workers. B. differences in the "job tastes" of workers. C. differences in the innate and acquired abilities of workers. D. geographic immobility.