In the following graph, the price of capital is $100 per unit. How many units of capital should a firm use in order to produce 500 units of output at the least cost?
A. 12 units of capital
B. 10 units of capital
C. 14 units of capital
D. 20 units of capital
E. none of the above
Answer: A
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One common definition of economics is the study of
A. how scarcity increases opportunities to meet ends. B. how markets overcome scarcity. C. one goal and three tasks. D. how to use limited means to meet unlimited wants. E. wants versus needs.
Those who favor passive policy making do so because they conclude that
A) price and wage flexibility is a common and speedy occurrence. B) there is a stable trade-off between inflation and unemployment in the short run. C) price and wage flexibility is an uncommon occurrence. D) pure competition is not typical in most markets.
In the long-run ISLM model and with everything else held constant, the long-run effect of an autonomous fall in consumption expenditure is to ________ real output and ________ the interest rate
A) increase; increase B) increase; not change C) not change; increase D) not change; decrease
When managers do not own very much of the net worth of the firm, then
A) there may be a principal-agent problem. B) the firm will usually have to raise most of its funds in financial markets. C) the firm will have to rely more on equity financing than debt financing. D) the firm will have to rely more on debt financing than equity financing.