Author Question: Refer to Table 8-27. What is the level of personal income for this economy? A) 1,140 billion B) ... (Read 49 times)

ETearle

  • Hero Member
  • *****
  • Posts: 580
Refer to Table 8-27. What is the level of personal income for this economy?
 
  A) 1,140 billion B) 1,010 billion C) 990 billion D) 860 billion

Question 2

Alan's Roast House sells roasted peanuts in a competitive market. The firm employs labor ata wage rate of 6 per hour and rents capital for 15 per hour.
 
  At its current level of labor and capital, the marginal product of labor is 12 and the marginal product of capital is 40 . Is the firm currently maximizing profit? Explain.



Perkypinki

  • Sr. Member
  • ****
  • Posts: 339
Answer to Question 1

B

Answer to Question 2

No, the firm is not 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 less than MPK/PK (2.67). Thus, the firm should hire less labor (which would raise MPL) and more capital (which would lower MPK).



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Fewer than 10% of babies are born on their exact due dates, 50% are born within 1 week of the due date, and 90% are born within 2 weeks of the date.

Did you know?

Cucumber slices relieve headaches by tightening blood vessels, reducing blood flow to the area, and relieving pressure.

Did you know?

Cocaine was isolated in 1860 and first used as a local anesthetic in 1884. Its first clinical use was by Sigmund Freud to wean a patient from morphine addiction. The fictional character Sherlock Holmes was supposed to be addicted to cocaine by injection.

Did you know?

The tallest man ever known was Robert Wadlow, an American, who reached the height of 8 feet 11 inches. He died at age 26 years from an infection caused by the immense weight of his body (491 pounds) and the stress on his leg bones and muscles.

Did you know?

Signs of depression include feeling sad most of the time for 2 weeks or longer; loss of interest in things normally enjoyed; lack of energy; sleep and appetite disturbances; weight changes; feelings of hopelessness, helplessness, or worthlessness; an inability to make decisions; and thoughts of death and suicide.

For a complete list of videos, visit our video library