The cost-minimizing rule is that a firm should utilize inputs such that the marginal physical product of an input divided by the price of the input is the same for all inputs. This is also the profit-maximizing rule because
A) we obtain the profit-maximizing rule by multiplying each ratio by the marginal revenue produced.
B) we obtain the profit-maximizing rule by multiplying each ratio by the product price, which is the same for each input.
C) the profit-maximizing rule is just the inverse of the cost-minimizing rule.
D) they are exactly the same.
Answer: B
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Use the following given market-for-money diagrams to answer the next question.
Curve D1 represents the
A. transactions demand for money. B. asset demand for money. C. total demand for money. D. stock of money.
The term "future value"
A. can be determined by inverting the formula for present value. B. is not used in modern public finance analysis. C. refers to the present value of future money. D. includes the shadow prices of all goods used in a project.
Which of the following is NOT a reason for the inability to stabilize output?
A) lags between observation and action B) policy actions can immediately take effect C) policy constraints D) preference to maintain long-range goals
At the point of consumer equilibrium, the slope of the budget line is equal to the:
A. indifference curve. B. consumer preference. C. market rate of indifference. D. marginal rate of substitution.