Profit maximization occurs where
A) each factor is used up to the point where its marginal revenue product is equal to its marginal factor cost.
B) each factor is used up to the point where its marginal physical product is equal to its marginal factor cost.
C) average variable cost equals marginal cost.
D) average variable cost equals average total cost.
Answer: A
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A monopsonist faces a constant elasticity of labor supply of 1.5. If the monopsonist pays $15 per hour, its marginal expenditure equals
A) $15. B) $25. C) $7. D) 25%.
In a small country, the adult population equals 5,000. There are 4,000 people in the labor force and 3,000 people are employed. The labor force participation rate equals
A) 25 percent. B) 80 percent. C) 30 percent. D) an undetermined amount given the lack of information.