In his book The Wealth of Nations, Adam Smith employed the example of a pin factory in order to explain what economic concept?
A) the relationship between the marginal and average product of labor
B) the law of diminishing returns
C) why no firm would want to hire so many workers as to experience a negative marginal product of labor
D) the division of labor
Answer: D
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Under what circumstances are the marginal expenditure for an input and the average expenditure always equal? Where there is a
A) competitive buyer. B) competitive seller. C) monopoly buyer. D) monopoly seller.
Which of the following would most likely cause the production possibilities curve for DVDs and food to shift outward?
a. A choice of more food and more DVDs. b. A choice of more food and less DVDs. c. A choice of more DVDs and less food. d. An increase in the quantity of natural resources.
The amount of unemployment varies
a. little over time and across countries. b. little over time but substantially across countries. c. substantially over time but little across countries. d. substantially over time and across countries.
Situation 32-1 In the early 1980s, the U.S. automobile industry managed to influence the government to negotiate a voluntary export restraint agreement with Japan that was in effect from 1981 until 1985. The predictable result was an average increase in the price of Japanese cars by about $1,000 and of U.S. cars by about $370. Also, as a result of the import quotas, 26,000 new jobs were "created"
in the U.S. automobile industry. Refer to Situation 32-l. At the time the total yearly salary (including all the benefits) of the average auto worker was no more than $50,000 per year, and the cost per job saved was estimated at $160,000 per worker per year. We can conclude that A) import quotas are a cost-efficient way of saving jobs. B) the U.S. auto industry, through its lobbying efforts, managed to promote the general public interest. C) the net social benefits of import quotas were positive. D) all of the above E) none of the above