Refer to the information provided in Figure 7.8 below to answer the question(s) that follow. 
Figure 7.8Refer to Figure 7.8. The firm is currently along isocost CD. If the price of capital is $25, then the price of labor is
A. $1.
B. $25.
C. $80.
D. indeterminate from the information given.
Answer: B
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Consider a downward-sloping demand curve. When the price of a normal good increases, the income and substitution effects
A) work in the same direction to increase quantity demanded. B) work in the same direction to decrease quantity demanded. C) work in opposite directions and quantity demanded increases. D) work in opposite directions and quantity demanded decreases.
On a bank's balance sheet, "borrowings" are
A) loans to households. B) loans to businesses. C) nondeposit liabilities. D) U.S. Treasury securities.
Consider the labor market for an industry that is initially in equilibrium. Which of the following changes can bring about a labor shortage in this industry?
a. A decrease in wage rate in another industry that uses similar labor resources b. A decrease in wage rate on account of a government policy c. An increase in the demand for the good produced by firms in this industry d. A decrease in the productivity of existing workers under the influence of unions
A monopolist
A. Has a perfectly inelastic demand curve B. Is a price taker C. Can always increase price to increase economic profit D. Is a price maker E. Has no control over the market price of a product it sells