Consider an economy where the only consumption good is ice cream. Firms in this economy must:
A) hire all workers and rent all machines available
B) choose how many workers to hire and ice cream machines to rent
C) choose how many workers to hire and rent all machines available
D) hire all workers and choose how many machines to rent
E) None of these answers are correct.

Question

Quizplus · Accepted Answer

In this economy, firms have to choose how many workers to hire and how many ice cream machines to rent to produce ice cream. Hence, option B is the best choice. Option A is not feasible as firms cannot hire all workers and rent all machines, as some firms may have excess machines or not require all workers. Option C is incorrect as firms only need to rent ice cream machines, not all available machines. Option D is also incorrect as firms do not need to hire all workers, and they have the freedom to choose how many machines to rent.

Consider an Economy Where the Only Consumption Good Is Ice