The Solow residual is
A) the waste from the production process.
B) the most common measure of productivity shocks.
C) a measure of the efficiency of the production process.
D) a measure of the proportion of involuntarily unemployed workers.
B
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If price is equal to average variable cost, a perfectly competitive firm breaks even
Indicate whether the statement is true or false
Average variable cost (AVC)
A) is the variable cost divided by the average sales price of the final good. B) is the variable cost divided by the quantity of output produced. C) is equal to average fixed cost (AFC) when no output is produced. D) is always less than average fixed cost (AFC).
The greater the interest rate, the ________ the present value and the ________ the discount factor.
A) larger; smaller B) larger; larger C) smaller; larger D) smaller; smaller
Suppose a firm is a price searcher in the product market and hires labor in a perfectly competitive labor market. The firm hires four workers, the marginal product of the fourth worker is 4, and the wage rate is $40 . The firm produces 100 units of the product, which sell for a price of $10 each. This firm is
a. maximizing profit when it hires four workers b. not maximizing profit and should hire more workers to increase profit c. not maximizing profit and should hire fewer workers to increase profit d. maximizing profit when it produces 100 units of the product e. not maximizing profit when it produces 100 units of the product and should increase production to increase profit