HK Sweaters, Incorporated employs labor at a wage rate of $12 per hour and rents capital for$30 per hour. At its current level of labor and capital, the marginal product of labor is 24 and the marginal product of capital is 60
Is the firm currently maximizing profit? Explain.
Yes, the firm is currently maximizing profit. The firm should hire labor and capital such that MPL/PL is equal to MPK/PK. In this case, MPL/PL (2) is equal to MPK/PK (2). Thus, the firm is maximizing profit.
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The Herfindahl-Hirschman Index is used as a guideline to determine if a market is competitive or concentrated. Calculate the index value for each market described below
a. 100 firms, each of which produces 1 per cent of market output b. 50 firms, each of which produces 2 per cent of market output c. 25 firms, each of which produces 4 per cent of market output d. 20 firms, each of which produces 5 per cent of market output e. 10 firms, each of which produces 10 per cent of market output f. 5 firms, each of which produces 20 per cent of market output g. 2 firms, each of which produces 50 per cent of market output
Lizzie's budget line is shown in the figure above. If Lizzie's income is $20, which of the following formulas represents her budget equation?
A) QC = 20 + QM B) QC = 20 - QM C) QC = -20 + 2 QM D) QC = 20 - 2QM
An increase in the equilibrium price and the equilibrium quantity would be caused by an increase in supply
a. True b. False Indicate whether the statement is true or false
Stock represents
a. a claim to a share of the profits of a firm. b. ownership in a firm. c. equity finance. d. All of the above are correct