The table below shows a competitive firm's short-run production function. Labor is the firm's only variable input, and market price for the firm's product is $2 per unit.
If the wage rate is $200, how many units of labor will the firm employ?
A. 3
B. 4
C. 5
D. 6
E. 0, the firm shuts down
Answer: B
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Refer to the figure above. After the demand curve shifts to D2, if the price is held below the new equilibrium, then:
A) the quantity demanded will equal the quantity supplied. B) the quantity demanded will be greater than the quantity supplied. C) the quantity demanded will be less than the quantity supplied. D) there will be zero deadweight loss.
Which of the following is likely to happen if the government imposes a price control at $60, when the demand curve shifts to D2?
A) There will be a shortage of 15 units of the good in the market. B) There will be a surplus of 15 units of the good in the market. C) There will be a shortage of 10 units of the good in the market. D) There will be a surplus of 10 units of the good in the market.