If a Firm Is Hiring Variable Resources D and F

question 84

Multiple Choice

If a firm is hiring variable resources D and F in perfectly competitive input markets,it will minimize the cost of producing any level of output by employing D and F in such amounts that:

• A) the price of each input equals its MP.
• B) MP_D = MP_F.
• C) MP_D/P_D = MP_F/P_F.
• D) MP_D/P_F = MP_F/P_D.

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Definitions:

Negative Excess Reserves

A situation where banks have less reserves than the required minimum, often indicating liquidity problems within the banking system.

Liquidity Trap

A condition where the effectiveness of monetary policy in spurring economic growth is diminished due to high rates of savings and low interest rates.

Reserve Requirement

Central bank regulations that set the minimum amount of reserves that must be held by a commercial bank, not to be loaned out or spent.

Time Deposits

Time Deposits are bank deposits with a fixed term or period of maturity, during which withdrawal entails a penalty, usually offering higher interest rates than savings accounts.