Suppose that capital and labor must be kept in a fixed proportion to produce a particular good. For example, digging a trench requires one worker who has one shovel. What does this imply about returns to scale?
A) There are constant returns to scale.
B) There are increasing returns to scale.
C) There are decreasing returns to scale.
D) Nothing.
A
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The monetary stimulus enacted in the fall of 2001 provides support for those economists who favor
a. stable money supply growth. b. activist monetary policy. c. rules-governed monetary policy. d. fixed rates of growth for the money supply.
Refer to the table below. The perfectly competitive market for dairy products has a 40 percent chance of a high price of $3.00 and a 60 percent chance of a low price of $2.00. To maximize expected profit, Happy Cows should produce ________ units and Free Cows should produce ________ units.
Happy Cows and Free Cows are two separate perfectly competitive dairy farms. The table above shows the respective firms' marginal cost at various production levels.
A) 120; 120
B) 140; 120
C) 120; 140
D) 140; 140