Suppose MPL = 20 and MPK = 40 and the rental rate on capital is $10 . If the level of production is currently efficient, the wage rate must be
a. $10
b. $5
c. $20
d. $40
b
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The concept of opportunity cost in a fully employed economy with technology and resources held constant tells us that
A. expansion of output in one industry means expansion cannot occur in another industry. B. expansion of output in one industry means output in another industry must contract. C. output cannot be increased in any industry. D. output of all industries must contract until more resources are found.
Which of the following is true for a firm with a downward-sloping demand curve for its product?
A) Price equals average revenue but is greater than marginal revenue. B) Price equals average revenue but is less than marginal revenue. C) Price, average revenue, and marginal revenue are all different. D) Price, average revenue, and marginal revenue are all equal.
Adverse selection in insurance requires that
a. all people face the same risk b. potential customers facing more risk are more interested in purchasing insurance c. people are not risk averse d. insurers can tell higher risk people from lower risk people
All but one of the following people were awarded a Nobel prize for their contributions to experimental economics and their explorations of the influence fairness has on consumer decision-making. Which person did not receive a Nobel Prize for this work?
A) Vernon Smith B) Alan Krueger C) Daniel Kahneman D) Maurice Allais