A firm is both hiring labor and selling output in purely competitive markets and is maximizing profits. It is currently operating in the elastic range of its MRP curve. If the wage rate increases, its total spending on wages at the new equilibrium will:
A. Be larger
B. Be smaller
C. Be unchanged
D. Change in an undetermined direction
B. Be smaller
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If expected inflation falls, the long-run Phillips curve will
A) shift to the left. B) shift to the right. C) become negatively sloped. D) not be affected.
If Microsoft stock has a constant net return each year, then the value of a share of Microsoft stock is determined by
a. subtracting Microsoft's total costs from its total revenue. b. multiplying the annual net income by the number of shares. c. dividing the annual net income from the asset by the interest rate. d. both a and b above.
Macroeconomic theory can be helpful to business managers, because:
a. It is like a crystal ball showing the future. b. It can reduce the odds of making bad decisions and increase the odds of making goods ones. c. It shows how the future is rather predictable, and by using these tools, countless riches can be made. d. It has been shown to be a highly accurate way of forecasting economic activity. e. All of the above.
Exhibit 21-4 Coffee and tea output (pounds per hour) CountryCoffee Tea Brazil10 5 China 8 8 As shown in Exhibit 21-4, if each country produced according to its comparative advantage, Brazil would produce:
A. tea and China would produce coffee. B. coffee and China would produce tea. C. both coffee and tea. D. neither coffee nor tea.