Peter's Pencils is a perfectly competitive company producing pencils. Suppose Peter is producing 1,000 pencils an hour. If the total cost of 1,000 pencils is $500, the market price per pencil is $2, and the marginal cost is $2, then Peter
A) makes an economic profit because marginal revenue is equal to marginal cost at this output level.
B) should decrease his output to increase his profit.
C) is maximizing his profit and is making an economic profit.
D) should increase his output to increase his profit.
E) is not maximizing his profit but is making zero economic profit anyway.
C
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What does the negative slope of the production possibilities frontier imply?
A) Diminishing marginal utility. B) The only way to increase one person's utility is to decrease the other's. C) Diminishing marginal rates of technical substitution. D) The only way to increase output of one good is to decrease output of another.
To keep employees from shirking, you can invest in greater monitoring
a. because monitoring is inexpensive b. especially when monitoring is not very efficient c. when employees respond well to incentive contracts d. when incentives solve both moral hazard and adverse selection problems with employees