Firms will continue to increase their purchase of factor inputs as long as ________
A) the marginal product of a given factor is greater than its real factor price
B) the marginal cost of a given factor is lower than its marginal product
C) their total revenues are greater than their total costs
D) all of the above
E) none of the above
D
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A lender who is worried that its cost of funds might rise during the term of a loan it has made can hedge against this rise without eliminating the chance to profit from a decline in the cost of funds by
A) buying futures contracts on Treasury bills. B) selling futures contracts on Treasury bills. C) buying put options on Treasury bills. D) buying call options on Treasury bills.
Refer to the above figure. Suppose the government requires the natural monopolist to charge the efficient price. Then profits for the firm will be
A) zero. B) losses equal to Q4 times distance f-g. C) losses equal to Q3 times distance d-e. D) profits equal to Q1 times distance a-b.
Demand-side inflation differs from supply-side inflation in the following way:
a. demand-side inflation has higher output; supply-side inflation has lower output. b. demand-side inflation has lower output; supply-side inflation has higher output. c. demand-side inflation is always followed by stagflation; supply-side inflation is always followed by demand-side inflation. d. demand-side inflation has a self-correcting mechanism; supply-side inflation does not.
Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the long run would be:
A. P1 and Y2. B. P2 and Y1. C. P3 and Y1. D. P3 and Y2.