Borrowers are ________ of loanable funds, and lenders are ...

[Yi-Chen]

Borrowers are ________ of loanable funds, and lenders are ________ of loanable funds.
 
  A) suppliers; demanders B) demanders; suppliers
  C) demanders; demanders D) suppliers; suppliers

Question 2

Mike's Pretzels employs labor at a wage rate of 8 per hour and rents capital for 20 per hour. At its current level of labor and capital, the marginal product of labor is 24 and the marginal product of capital is 55 .
 
  Is the firm currently maximizing profit? Explain.

[nicoleclaire22]

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 (3) is greater than MPK/PK (2.75). Thus, the firm should hire more labor (which would lower MPL) and less capital (which would raise MPK).

[Yi-Chen]

Excellent

[mcarey591]

Thanks for the timely response, appreciate it