A rise in the price of a good causes producers to supply more of the good. This statement illustrates
A) the law of supply.
B) the law of demand.
C) a change in supply.
D) the nature of an inferior good.
A
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Suppose a firm is employing labour (L) and capital (K) such that MPK/MPL = PK/PL. If the price of labour rises, the cost -minimizing firm should:
a) employ more capital and less labour because MPK/MPL < PK/PL. b) do nothing. c) employ more labour and less capital because MPK/MPL > PK/PL. d) employ more capital and less labour because MPK/MPL > PK/PL. e) employ more labour and less capital because MPK/MPL < PK/PL.
In markets free from intervention, prices tend to move towards equilibrium because of
A) the "helping hand" of government. B) increased demand from buyers. C) increased supply by sellers. D) the unintended consequences of choices among buyers and sellers pursuing their own plans.