If a firm wants to maximize profits it should
A) hire lots of capital and very little labor since labor needs to be trained.
B) hire unskilled labor rather than skilled labor since unskilled labor is cheaper.
C) equate the marginal physical product for each input to the price of the input.
D) equate the marginal revenue product for each input to the price of the input.
Answer: D
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One of the tendencies that is common among firms regulated using rate of return regulation is to
A) increase production to an inefficient level. B) inflate the costs of production. C) incur an economic loss. D) understate the costs of production. E) overstate their total revenue.
If there are discouraged workers: a. they are included in the official count of the unemployed
b. the unemployment rate will tend to overstate the true level of unemployment. c. the unemployment rate will tend to understate the true level of unemployment. d. they are considered part of the labor force.