Suppose that real domestic output in an economy is 300 units, the quantity of inputs is 50, and the price of each input is $9. The level of productivity in this economy is:
A. 50.
B. 5.
C. 6.
D. 9.
Answer: C
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A labor union is a group of workers and business owners who join together to improve working conditions
a. True b. False
The notion that the annual rate of increase in the money supply should be equal to the potential annual growth rate of real GDP best describes the:
A. Monetary rule B. Velocity of money C. Equation of exchange D. Crowding-out effect
A U.S. firm currently produces 200 units of output according to the production function q = L0.5K0.5 and faces input prices equal to wU.S. = rU.S = $11. Should the U.S
firm move their company abroad where they will face input prices equal to wabroad = $6.50 and rabroad = $15.00? A) Yes, because the total costs will fall from $3,859 to $2,810. B) No, because the total costs will increase from $2,810 to $3,859. C) No, because the firm has decreasing returns to scale. D) Not enough information is given to answer this problem.
Economies of scale may be a barrier to entry in a situation in which
A) only small-scale production can lower the per-unit cost of production. B) only small-scale production can meet the constantly changing market demand. C) only large-scale production can lower the per-unit cost of production. D) large-scale production is inefficient.