For a perfectly competitive firm, marginal revenue product is equal to price minus marginal revenue.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 2An increase in government purchases must always be accompanied by an increase in autonomous net taxes to boost aggregate demand.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3Suppose the real gross domestic product (GDP) equals 100 billion this year and the nominal gross domestic product (GDP) is 200 billion. This implies that the price level has increased by _____.
a. 200 billion
b. 50 percent
c. 100 billion
d. 100 percent
e. 200 percent
QUESTION 4In a monopsonistic labor market, workers are paid a wage:
a. below their MRP.
b. equal to the intersection of MRP and S.
c. equal to the MFC.
d. equal to the price of the output.
e. above their MFC.
QUESTION 5The only way by which government can affect aggregate demand is through changes in its own purchases.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6If a monopsony finds that its MRP is greater than its MFC, it:
a. is doing the right thing to maximize profits.
b. should hire fewer workers to increase profits.
c. should hire more workers to increase profits.
d. should pay the workers a lower wage.
e. should produce less output.
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