What is an example of the scale effect?
A. Workers choose to provide more hours of labor when the wage rate decreases.
B. The firm expands output when production costs increase.
C. The firm hires more labor as long as the marginal product of labor is positive.
D. The firm hires more labor when the wage falls because labor has become relatively cheaper compared to the price of other factors of production.
E. The firm expands output when production costs fall.
Answer: E
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Interest rates are determined by the supply and demand for
A) money. B) capital goods. C) loanable funds. D) foreign currencies. E) stocks.
Suppose a taco costs $4 and a burrito costs $2. Moreover, this Mexican restaurant has a special deal. After you've bought 6 burritos, you can buy each extra burrito for $1.50. Assume that tacos are on the vertical axis and burritos on the horizontal axis. What is the marginal rate of transformation (MRT) when 8 burritos are purchased?
A) MRT = 0.375 B) MRT = 0.50 C) MRT = 2 D) MRT = 2.67