"Optimal input curve analysis is useless. Since firms never know the demand for their product with certainty, they will rarely operate at the optimal input combination." Agree or disagree?
Disagree. Optimal input analysis is a guide to correct decision making. Firms may not be able to estimate precisely MPP or production functions; a part of business acumen is instinct. Nevertheless, the outcomes should closely resemble the predictions from a model of optimal input usage if the firm is to be successful.
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For the monopsonist, marginal expenditure is greater than the wage rate because the monopsonist
A) pays a wage higher than that paid in a competitive market. B) chooses the perfectly competitive quantity of labor. C) must increase the wage to all units of labor to attract more units of labor. D) must take the wage as given by the market.
A deadweight loss of consumer and/or producer surplus occurs when:
a. producers fail to maximize profits. b. mutually beneficial transactions cannot be completed. c. consumers do not maximize their utility. d. the price of inputs increases.
A profit-maximizing competitive firm is earning a profit of $24,000 . Its marginal cost is $17 and its average total cost is $13 . How many units of output is the firm producing and selling?
A credit item in the balance of payments is
A. any imported item. B. any loan given out by the country. C. an item for which the country must be paid. D. an item that creates a monetary claim owed to a foreigner.