Suppose the current market wage rate (w) is $4. In the short run, a firm's marginal cost at the current output level is $2. What is this firm's marginal product of labor?

A decrease in the quantity of available resources would be represented by:

a. a steeper PPC. b. a point inside the PPC. c. an inward shift of the PPC. d. an upward movement along the PPC. e. a downward movement along the PPC.

Why do firms spend money on costly innovation?

A. Competitive markets leave firms no choice but to innovate. B. Innovation is a low-risk activity. C. Innovation always results in higher profits for firms. D. Innovation is usually profitable because the majority of innovations reach the market place. E. Because innovation is beneficial for society and firms are motivated to act in ways that are beneficial for society.