Refer to the diagram, in which Q f is the full-employment output. If the economy's present aggregate demand curve is AD 2 :
A. the most appropriate fiscal policy is an increase of government expenditures or a reduction of taxes.
B. the most appropriate fiscal policy is a reduction of government expenditures or an increase
of taxes.
C. government should undertake neither an expansionary nor a contractionary fiscal policy.
D. the economy is achieving its maximum possible output.
C. government should undertake neither an expansionary nor a contractionary fiscal policy.
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Based on the above figure of the costs at Barney's Bagel Bakery, at which of the following levels of output does the marginal product of labor equal the average product of labor?
A) at 500 bagels B) at 2000 bagels C) at 3000 bagels D) None of the above because the marginal and average products of labor can never be equal.
The “law” of diminishing returns
A. is deduced from the basic biochemical relationship of agricultural theory. B. was constructed as the basis of observation during experiments on the impact of fertilizer on output in the 1930s. C. is based on regular observations of input-output relationships over the last two centuries. D. is borrowed from physical laws related to conversion of matter and energy.
Consider the following payoff matrix facing Harry and Sally when each chooses to go to the coffee shop listed. Harry wants to avoid Sally at the coffee shop and is not happy when Sally ends up in the same shop he chooses. Sally would like to see Harry, and so she is not happy when Harry ends up in a different coffee shop. Harry StarbucksDunkin DonutsSally StarbucksH: ?1, S: 1H: 1, S: ?1 Dunkin DonutsH: 1, S: ?1H: ?1, S: 1Assuming that Sally and Harry go to the coffee shop each day, what is Harry's best strategy?
A. Go to Starbucks one day and Dunkin' Donuts the next and maintain that pattern. B. Go to Starbucks because Sally won't go there. C. Go to Dunkin' Donuts because Sally won't go there. D. Randomly choose between going to Starbucks and going to Dunkin' Donuts.
When a good causes positive external benefits to accrue to third parties, an unfettered market will
A. eliminate such goods. B. under-allocate resources to the good causing the benefit. C. over-allocate resources to the good causing the benefit. D. cause the equilibrium quantity, established before the benefit is taken into account, to be produced more efficiently.