Assume that an employer discovers that the marginal revenue product of the last two workers that he has hired is less than the wage rate that he is paying them
He is operating in a purely competitive market in both the output that he sells and the labor that he hires. What would you advise this employer to do and why?
It would be advisable if this employer laid off these two workers. The reason is that the wage rate in a competitive market is the same as the marginal cost of labor. Since these two workers are not "paying their way" laying them off will increase the profitability of the firm or lower its losses.
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Which of the following observations concerning leading economic indicators is true? a. They provide warnings of likely downturns
b. They provide accurate information on the depth of a downturn. c. They provide accurate information on the duration of a downturn. d. Both b. and c. are true.
Refer to the given information. If nominal GDP is $200 and the interest rate is 6 percent, the total amount of money that households and businesses will want to hold is:
Answer the question on the basis of the following information. For transactions, households
and businesses want to hold an amount of money equal to one-half of nominal GDP. The table
shows the amounts of money they want to hold as an asset at various interest rates.
A. $120.
B. $140.
C. $160.
D. $180.