A firm uses workers and seed to grow lettuce. Its lettuce output rises from 100 tons to 200 tons when the number of workers increases from 25 to 75. Its production process shows
A. decreasing returns to scale.
B. diminishing returns to labor.
C. increasing long-run average cost.
D. decreasing short-run average variable cost.
Answer: B
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When the price level falls,
A) there is a movement upward along the AS curve. B) both the potential GDP line and the AS curve shift leftward. C) the AS curve shifts leftward but the potential GDP line does not shift. D) the AS curve shifts rightward but the potential GDP line does not shift. E) there is a movement downward along the AS curve.
The non-exclusion principle means
A) no one can be excluded from the benefits of a public good, even if the person does not pay for it. B) no one can be excluded from the benefits of a private good, even if only one person pays for it. C) no one who pays for a public good can be excluded from receiving the benefits of a public good. D) people who do not pay for a public good can be excluded from receiving its benefits.
In analyzing recessions, Keynes' view was that
A. the economy may eventually recover by itself, but it takes too long. B. the government could stimulate aggregate purchases by reducing the budget deficit. C. the economy will never recover because wages and prices will never adjust downward. D. any cyclical unemployment will be short-lived, and thus there is no need for increased government spending.
Which of the following items is NOT a deficit item in the balance of payments?
A. imports of merchandise B. sales of domestic assets to foreigners C. military spending abroad D. purchases of gold from foreigners