In each of the following four cases, MRP L and MRP C refer to the marginal revenue products of labor and capital, respectively, and P L and P C refer to their prices. Indicate in each case whether the conditions are consistent with maximum profits for the firm. If not, state which resource(s) should be used in larger amounts and which resource(s) should be used in smaller amounts.
a. MRPL = $8; PL = $4; MRPC = $8; PC = $4
1. These conditions are consistent with maximum profits for the firm.
True or False
2. Which resource should be used in larger and/or smaller amounts?
i- Use less of both
ii- Conditions are already consistent
iii- Use more of both
iv- Use less labor and more capital
v- Use more labor and less capital
Answers: 2
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When the two countries did not specialize, the total production of jeans was 23 million pairs per month, and the total production of corn was 68 million bushels per month. because of specialization, the total production of jeans has increased by million pairs per month, and the total production of corn has increased by million bushels per month. because the two countries produce more jeans and more corn under specialization, each country is able to gain from trade?
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In each of the following four cases, MRP L and MRP C refer to the marginal revenue products of labor...
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