The best output or the optimal production of the nation is:
A. A combination of products at the midpoint of the production possibilities curve
B. A combination of products at the two endpoints of the production possibilities curve
C. Determined by equalizing the marginal benefits and marginal costs of each product
D. The production combination where the opportunity costs are minimized
Answer: C
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If a firm in monopolistic competition lowers its price, what will happen to the quantity of products it sells?
a. The quantity of products sold will increase and sales revenue will fall. b. The quantity of products sold will decrease because this is not perfect competition. c. The quantity of products sold will increase slightly—and in some cases not at all. d. The quantity of products sold and sales revenues will increase as the firm lures customers from its competitors and attracts new customers.
According to Keynesian theory, the profit-maximizing firm demands labor up to the point at which
a. the real wage is equal to the marginal productivity of labor. b. the money wage paid to labor is just equal to the money value of the marginal product of labor. c. labor and capital costs are equal. d. a and/or b are correct.