Refer to Figure 17-6. If firms and workers have rational expectations, an expansionary monetary policy will cause the short-run equilibrium to move from

If the price of labor increases, the typical perfectly competitive firm in the short run will

A) produce more output. B) hire less labor. C) hire the same labor and produce the same output. D) hire more labor.

A business is employing inputs such that the marginal product of labor is 40 and the marginal product of capital is 90. The price of labor is $20 and the price of capital is $30. If the business wants to minimize costs while keeping output constant, then it should:

A. Use more labor and less capital B. Use less labor and less capital C. Use less labor and more capital D. Make no change in resource use