For a firm that uses land, labor and capital as inputs, how should the inputs be utilized in order to minimize total costs?
What will be an ideal response?
Given a particular rate of production, the firm can minimize total costs by hiring each of the three inputs up to the point at which the marginal physical product per last dollar spent on each input is equalized across the three inputs.
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A firm in a perfectly competitive industry will maximize profits by adjusting
A) average total cost until it equals price. B) price until marginal revenue equals marginal cost. C) output until average revenue equals short-run average total cost. D) output until marginal cost equals marginal revenue. E) price until average revenue equals average total cost.
Suppose that the production function for the economy is: Y = AK1/4L3/4. Assume that real GDP is $8,000 billion, capital stock is $32,000 billion, and the labor supply is 120 million (or 0.120 billion) workers
An increase of one worker will increase real GDP by A) $8. B) $50,000. C) $720,000. D) $6,000,000.