An improvement in one of the four supply factors is a sufficient condition for economic growth. Evaluate.
What will be an ideal response?
An increase in at least one of the four supply factors is a necessary condition for economic growth, but not sufficient. An increase or improvement in the supply factors will increase the potential size of an economy’s GDP. The other factors, demand and efficiency, are required to reach that potential. Households, businesses, and the government must expand their purchases of and services to provide a market for the output. The economy must also use the least costly way to produce the specific mix of goods and services that maximizes people’s well-being.
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How are total and marginal utility related?
What will be an ideal response?
If a firm is maximizing profits, the extra revenue it receives from selling its last unit of output exceeds the extra cost of producing that unit
Indicate whether the statement is true or false
Firms might vertically disintegrate when
A) it becomes more profitable for a firm to specialize. B) the IRS cracks down on transfer pricing. C) the industry becomes too large to support itself. D) the industry shrinks in size.
To answer the question, refer to the following figure, showing the marginal revenue product (MRP) and the average revenue product (ARP) curves of a perfectly competitive firm hiring a single variable input, labor.
If the wage is $20, how many workers will the firm hire?
A. 200 B. 175 C. zero D. 225