A firm has two plants, one in the United States and one in Mexico, and it cannot change the size of the plants or the amount of capital equipment. The wage in Mexico is $5. The wage in the U.S. is $20. Given current employment, the marginal product of the last worker in Mexico is […]
Date: September 9th, 2020
A firm is making a long-run planning decision. It wants to decide on the optimal size of plant and labor force. It is considering building a medium-sized plant and hiring 100 workers. Engineering estimates suggest that at those levels, the marginal product of capital will be 100 and the marginal product of labor will be […]
Date: September 9th, 2020
Markets tend to produce too little of an excludable public good because A) transaction costs are high. B) of the lack of rivalry. C) these goods are depletable. D) All of the above. ANSWER B
Date: September 9th, 2020
Simulation analysis A) permits the calculation of expected value and standard deviation. B) does not permit the calculation of expected value and standard deviation. C) is too complex to ever be used in actual business situations. D) does not consider probabilities. ANSWER A
Date: September 9th, 2020
The XYZ Co is hiring salespersons. They will be paid a very attractive hourly rate that is independent of how much they sell. Describe an adverse selection that would take place. Describe a moral hazard that would take place. What will be an ideal response? ANSWER The adverse selection occurs when only below-average salespeople […]
Date: September 9th, 2020
The total demand for a public good is found by A) horizontally summing all individual demands. B) vertically summing all individual demands. C) finding the demand from the median voter. D) dividing the marginal cost of the good by the number of voters. ANSWER B
Date: September 9th, 2020
The expected value is A) the total of all possible outcomes. B) the arithmetic average of all possible outcomes. C) the average of all possible outcomes weighted by their respective probabilities. D) the total of all possible outcomes divided by the number of different possible outcomes. ANSWER C
Date: September 9th, 2020
An advantage of using the cross-sectional regression method in estimating production is that A) the problem of technological change over time is overcome. B) there is no need to adjust data, which are in monetary terms for geographical differences. C) we can assume that all plants operate at their most efficient input combinations. D) All […]
Date: September 9th, 2020
The table above shows the weekly relationship between output and number of workers for a factory with a fixed size of plant. a. Calculate the marginal product of labor. b. At what point does diminishing returns set in? c. Calculate the average product of labor. d. Find the three stages of production. ANSWER Number […]
Date: September 9th, 2020
The market for used cars is shown in the above figure. Buyers cannot tell whether any given car is a lemon. For all cars offered for sale to be sold, the percent of all cars that are lemons is θ. What happens to θ if car buyers incur a $100 transaction cost when buying a […]
Date: September 9th, 2020
