Quiz 4 - They are the scale effect and the substitution...

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Quiz 4 – Monday September 24 Name: Answer Key . 1. What is a firm’s goal? (To maximize what?) Profit 2. The firm’s short run hiring rule is where VMP E = w. The firm’s long run hiring rule is where VMP E = w and VMP K = r . 3. A change in the wage had two different effects on a firm.
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Unformatted text preview: They are the scale effect and the substitution effect. 4. True or false: When there is a change in wage a firm always uses more capital. False. 5. True or false: The slope of the isoquant is called the marginal rate of technical substitution. True ....
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