A production possibilities frontier can shift inward if there is
a. an increase in the unemployment rate
b. mandatory retirement at age 55
c. an improvement in technology
d. a larger work force
e. a larger capital stock
B
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When considering setting the transfer price at the market price of a product similar to the intermediate good that is already available on the market
a. It is appropriate to ignore that the market price includes a margin above marginal cost b. It is OK if the product on the market includes costly features your downstream division does not use c. it is OK if the product on the market is inexpensive because its quality is lower than you use d. if it is similar enough, it calls into question whether there are gains from producing it in-house
A purely competitive firm in the factor and product markets sells its output for $1 and pays factors PL = $4 and PC = $3. What is the profit-maximizing combination of L and C for the firm?
A. 8 of L and 8 of C
B. 4 of L and 3 of C
C. 5 of L and 2 of C
D. 6 of L and 6 of C