Figure 10.1 depicts a firm's marginal revenue product curve. If the prevailing hourly wage increases:
A. the marginal revenue product curve shifts upward.
B. the marginal revenue product curve shifts downward.
C. the marginal revenue product curve does not shift, but there is a movement upward along the curve.
D. the marginal revenue product curve does not shift, but there is a movement downward along the curve.
Answer: C
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If a firm is able to set price,
A) it is a monopoly. B) its marginal revenue is constant. C) it sells its output at a constant price. D) it faces a downward-sloping demand curve.
In a market economy, what determines whether an entrepreneur will continue in business or terminate the production of a new product?
a. government regulations b. licensing by industrial development agencies c. the profit or loss of the business d. the taxes paid to the government relative to the subsidies received
If the Federal Reserve increases the money supply, then initially people want to
a. sell bonds so the interest rate rises. b. sell bonds so the interest rate falls. c. buy bonds so the interest rate rises. d. buy bonds so the interest rate falls.
Which of the following is (are) characteristics of an isocost curve?
A. The slope shows the rate at which the firm can substitute labor for capital while holding B. total cost constant. C. The slope shows the rate at which the firm can substitute labor for capital in the market. D. If the price of capital is unchanged and the price of labor increases, the intercept of the isocost curve on the horizontal axis will decrease. E. both a and c F. all of the above