Joan Jillson owns a coffee shop. Assume that the marginal product of the labor Joan employs (MPL) equals 500 cups per week and the marginal product of her shop's capital (MPK) equals 1,000
Assume also that the wage (w) Joan pays her workers equals $250 per week and the rental price (r) of her capital - her coffee machines - equals $500 per week. Which of the following correctly analyzes whether Joan is minimizing her costs?
A) No, Joan is not minimizing her costs because MPL × w is less than MPK × r.
B) No, Joan is not minimizing her costs because MPK is greater than MPL and r is greater than w.
C) Yes, Joan is minimizing her costs because she is a price-taker in the markets for labor and capital.
D) Yes, Joan is minimizing her costs because MPK/r equals MPL/w.
D
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Which of these measures the responsiveness of the quantity of one good demanded to an increase in the price of another good?
A) price elasticity. B) income elasticity. C) cross-price elasticity. D) cross substitution elasticity.
If the long-run Phillips curve is vertical, then any government policy designed to lower:
a. unemployment will not change the unemployment rate and only increase the inflation rate. b. unemployment will work leaving the inflation rate unchanged. c. inflation will cause employment to rise. d. unemployment will work causing the inflation rate to fall. e. unemployment will work causing inflation to rise.