Figure 10.1 depicts a firm's marginal revenue product curve. If the firm maximizes its profit and the hourly wage is $15, how many hours of labor will the firm demand?
A. smaller than 30 hours
B. between 30 hours and 40 hours
C. between 40 hours and 50 hours
D. greater than 50 hours
Answer: B
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The aggregate demand curve shifts when any of the following factors change EXCEPT
A) monetary policy. B) fiscal policy. C) the price level. D) expectations about the future. E) foreign income.
If some nonprice level determinant causes total spending to decrease, then the effect on aggregate demand will be a: a. movement upward along the curve
b. movement downward along the curve. c. shift to the left. d. shift to the right.
If there is currently a recessionary gap: a. The price level will tend to rise. b. Real output will tend to rise
c. Both a. and b. will occur. d. None of the above will occur.
A risk-neutral monopoly must set output before it knows the market price. There is a 50 percent chance the firm's demand curve will be P = 20 ? Q and a 50 percent chance it will be P = 40 ? Q. The marginal cost of the firm is MC = Q. The profits are maximized in the expected sense when:
A. MC < E(MR). B. MC = E(MR). C. Expected value of price = E(MR). D. MC = Expected value of price.