A Firm Will Hire a Unit of Input Up to the Point

question 95

Multiple Choice

A firm will hire a unit of input up to the point where

• A) the marginal cost of the input equals the marginal cost of output.
• B) the marginal revenue product of the input is equal to the marginal factor cost of the input.
• C) the price of the input is equal to the price of output.
• D) the marginal physical product of the input is equal to the price of output.

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Definitions:

Inflation Expectations

The anticipation by consumers and businesses of the rate at which prices will rise in the future.

Phillips Curve

An economic theory suggesting an inverse relationship between the rate of inflation and the rate of unemployment within an economy.

Money Supply

Money supply is the total amount of monetary assets available in an economy at a specific time.

Inflation Expectations

Inflation expectations refer to the rate at which people expect prices to increase in the future, which can influence economic decisions in the present.