The marginal product of labor
A. measures how output changes as the wage rate changes.
B. is negative when adding another unit of labor decreases output.
C. is less than the average product of labor when the average product of labor is decreasing.
D. both a and b
E. both b and c
Answer: E
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Assume glassware is produced by firms in a competitive industry, one of which is Gregor's Glassworks.
(i) Suppose a rent increase is imposed on Gregor's Glassworks but not on its competitors. When would the rent increase cause Gregor to exit the industry? Explain. (ii) Suppose an earthquake destroys most of Gregor's stock but does not affect his competitors. When would the damages cause Gregor to exit the industry? Explain.
The Golden Rule of capital accumulation maximizes the steady-state level of
A) output per worker. B) capital per worker. C) consumption per worker. D) investment per worker.
Answer the following statements true (T) or false (F)
1) All else equal, firms with a few large plants are more likely to have lower average costs than firms with many small plants. 2) A plant is located at the cost-minimizing location when the marginal benefit of moving closer to the inputs is exactly double the marginal cost of moving closer. 3) If a firm is not directly paying all of the transportation costs, managers still have an incentive to minimize the sum of the production and transportation costs. 4) If a firm has two plants, one in a desirable location and one in an undesirable location, workers located in the desirable location are likely to be paid more. 5) If a firm has two plants and workers at Plant 1 are paid $40,000 a year and workers at Plant 2 are paid $45,000, the $5,000 difference in salary is a compensating wage differential.
"Net exports" rather than "exports" are included in demand/expenditures, because:
a. Actually, exports are included and not net exports because only exports are a source of demand. b. Imports are counted in personal consumption expenditures. Therefore, net exports instead of just exports are included in aggregate demand. c. Imported goods and services are a part of personal consumption, gross private domestic Investment, and government spending. Therefore, net exports instead of just exports are included in demand. d. Neither exports nor net exports is included in aggregate demand. e. None of the above.