The Demand and Supply Curves Shown Below Apply to a Competitive

question 118

Multiple Choice

The demand and supply curves shown below apply to a competitive market for a factor used in the production of widgets. FIGURE 13-2
-Refer to Figure 13-2.This factor market is in equilibrium at point B.What is the marginal revenue product of the 40th unit of the factor employed?

• A)$8 multiplied by the price of the product
• B)$320
• C)$8
• D)the marginal product of the 40th unit employed multiplied by the wage
• E)$8 multiplied by the marginal revenue of the 40th unit employed

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Definitions:

Market Rate

The prevailing interest rate available in the marketplace, often used as a benchmark for setting loan or investment interest rates.

Compound Semi-Annually

Interest on an investment or loan is calculated twice a year, with each calculation adding the accrued interest to the principal for future interest computation.

Strip Bond

A debt security that has had its main components, such as periodic interest payments, separated, leaving only the principal to be repaid at maturity.

Discount Rate

The interest rate charged by central banks to commercial banks for loans and advances, influencing monetary policy and overall economy.