HK Sweaters, Incorporated employs labor at a wage rate of $12 per hour and rents capital for$30 per hour. At its current level of labor and capital, the marginal product of labor is 24 and the marginal product of capital is 60
Is the firm currently maximizing profit? Explain.
Yes, the firm is currently maximizing profit. The firm should hire labor and capital such that MPL/PL is equal to MPK/PK. In this case, MPL/PL (2) is equal to MPK/PK (2). Thus, the firm is maximizing profit.
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Which of the following is TRUE?
A) A country experiencing a debt or currency crisis would contact the World Trade Organization. B) The World Trade Organization was formed at the Bretton Woods conference. C) The General Agreement on Tariffs and Trade created the World Trade Organization in the negotiations and treaty known as the Uruguay Round. D) The World Trade Organization has no power to resolve trade disputes and to enforce their resolution.
Which of the following distinguishes the short run from the long run in pure competition?
A. Firms can enter and exit the market in the long run but not in the short run. B. Firms attempt to maximize profits in the long run but not in the short run. C. Firms use the MR = MC rule to maximize profits in the short run but not in the long run. D. The quantity of labor hired can vary in the long run but not in the short run.