If a firm is maximizing profit and the marginal revenue product of labor is $10 and the marginal revenue product of capital is $30, then
a. the marginal resource cost of labor is $3, and the marginal resource cost of capital is $0.33
b. the marginal resource cost of labor is $0.33, and the marginal resource cost of capital is $3
c. the marginal resource cost of labor equals the marginal resource cost of capital; both are $300
d. the marginal resource cost of labor is 1/3 of the marginal resource cost of capital
e. we have no way of knowing the marginal resource cost of either labor or capital
D
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
If Japanese workers are more productive than French workers then trade between Japan and France
A) cannot take place because Japanese goods and services will be less expensive than French goods and services. B) can take place only if France has an absolute advantage in producing a good or service Japanese buyers want. C) will take place so long as each country has a comparative advantage in a good or service that buyers in the other country want. D) cannot take place until French workers become more productive.
A mathematical technique used to solve constrained optimization problems (finding the consumer optimum, for example) is:
A) the method of Lagrange multipliers. B) the Cobb-Douglas method. C) the Slutsky method. D) the Hicks substitution method.
When a country fixes the price of foreign exchange (in terms of the domestic currency) below equilibrium, which of the following will result?
a. A black market will develop for foreign exchange. b. Residents of that country can buy as much foreign currency as they want. c. There will be a surplus of foreign exchange. d. A depreciation of the currency will restore equilibrium in the foreign exchange market.