Author Question: Assume that a firm spends 500 on two inputs, labor (graphed on the horizontal axis) and capital ... (Read 180 times)

schs14 · **on:** Jul 1, 2018

Assume that a firm spends 500 on two inputs, labor (graphed on the horizontal axis) and capital (graphed on the vertical axis).

If the wage rate is 20 per hour and the rental cost of capital is 25 per hour, the slope of the isocost curve will be A) 500.
B) 25/500.
C) -4/5.
D) 25/20 or 1.25.

Question 2

A monopolistically competitive firm in long-run equilibrium:

A) will make negative profit.
B) will make zero profit.
C) will make positive profit.
D) Any of the above are possible.