Answer the following statement(s) true (T) or false (F)
1. Diminishing marginal returns is basically the same concept as decreasing returns to scale..
2. The unit isoquant represents all possible ways of producing one unit.
3. If the wage and rental rates are $10 and $50 per hour respectively and an additional worker could
produce 100 units of output in an hour, then an extra unit of capital could produce 500 units of output in an hour.
4. If the marginal product of labor is currently 40 units per hour and the marginal product of capital is currently 20 units per hour, then workers must be getting paid twice as much as capital per hour.
5. If all inputs are variable in the long run, then there cannot be decreasing returns to scale. But if some inputs remain fixed in the long run, then decreasing returns to scale can occur.
1. False
2. False
3. True
4. True
5. True
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Which of the following demonstrates the law of supply?
a. When the price of leather belts rose, leather belt sellers increase their quantity supplied of leather belts. b. When car production technology improved, car producers increased their supply of cars. c. When sweater producers expected sweater prices to rise in the near future, they decreased their current supply of sweaters. d. When ketchup prices rose, ketchup sellers decreased their quantity supplied of ketchup.
Between 1975 and 2011, the wage gap between men with a high school education and men with a college education increased. In particular, in 2011 men with a college degree earned about
a. 10% more than men with a high school education. b. 25% more than men with a high school education. c. 75% more than men with a high school education. d. 90% more than men with a high school education.
Which of the following is NOT given in the text as a problem with using surveys to determine consumer preferences?
A. Subjects are asked to imagine choices that they do not actually face, and few people take hypothetical questions as seriously as they would actual choices. B. Some people have difficulty forecasting their own behavior. C. People may answer with what they think they ought to do, not what they think they actually would do. D. Many people maliciously try to tamper with survey results by giving false answers.
A broad government initiative to reduce a country's reliance on agriculture and promote high-technology industries is an example of ________ policy.
A. monetary B. structural C. aggregation D. fiscal