Refer to the following graph. The price of capital (r) is $20.
What combination of labor (L) and capital (K) can produce 5,000 units of output at lowest cost?
A. 60K, 20L
B. 110K, 10L
C. 42K, 52L
D. 10K, 110L
E. 90K, 60L
Answer: A
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If the Fed sells bonds through its open market operations, then there is
A) a decrease in interest rates because of the increase in the supply of bonds. B) an increase in the demand for bonds and a rise in the price of existing bonds. C) a decrease in interest rates because of the decrease in the demand for bonds. D) an increase in the supply of bonds and a fall in the price of existing bonds.
Aggregate demand does not include: a. Purchases of intermediate goods and final goods
b. Purchases of used goods and services. c. Purchases of stocks and bonds. d. Aggregate demand does not include any of the above.
A curve that shows all of the alternative consumption bundles that the consumer likes equally well is called:
A. a budget constraint. B. an indifference curve. C. an individual demand curve. D. a consumption bundle curve.
Some proponents of trade sanctions argue for changes in policy because they fear low standards will be used to capture markets and foreign investment. While theoretically possible, there is little or no support for the view that countries use low labor standards this way, because
A) countries with low labor standards generally have trouble attracting foreign investment. B) low standards can change a country's comparative advantage. C) it is impossible to lower labor standards. D) countries would not have an incentive to have low standards.