Profit maximization requires that
A. equal amounts of each input are employed.
B. the amount of one input hired divided by the amount of another input hired equals the total costs of the first input hired divided by the total costs of the second input.
C. the marginal factor cost of every input equals that input's marginal physical product.
D. the marginal factor cost of every input equals that input's marginal revenue product.
Answer: D
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The introduction of a new technology that raises the marginal product of new capital will:
A. decrease real interest rates and increase the equilibrium quantity of saving supplied and demanded. B. increase real interest rates and decrease the equilibrium quantity of saving supplied and demanded. C. decrease real interest rates and the equilibrium quantity of saving supplied and demanded. D. increase real interest rates and the equilibrium quantity of saving supplied and demanded.
An automobile manufacturing plant is likely to have a ______________ price elasticity of supply than a bread bakery due to _________________.
A. more elastic; a more flexible production process B. more elastic; greater availability of inputs C. less elastic; a less flexible production process D. more elastic; lower availability of inputs
A firm earns an operating profit if
a. price equals marginal cost. b. revenues exceed variable costs of production. c. price is less than average variable costs of production d. revenues equal fixed costs.
The central bank is said to monetize the deficit when it
A. prints Federal Reserve notes to satisfy the increased demand for money. B. sells government bonds from its own portfolio of government securities. C. requires member banks to buy the bonds to finance the deficit. D. purchases the bonds that the government issues.