The marginal physical product (MPP) is calculated by
A) dividing total physical product by labor.
B) dividing the change in total physical product by the change in the input.
C) dividing the change in total cost by the change in labor.
D) the difference between the output of skilled and unskilled workers.
Answer: B
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The marginal propensity to consume is assumed to be
A) greater than 1. B) less than 1. C) greater than 2. D) less than 0.5.
When market failures occur
A) the invisible hand will correct for the market failures. B) the price system will correct the market failures. C) people will reduce their consumption. D) the government can step in to correct the market failure.
Which of the following statements is true?
a. Disinflation is an increase in the rate of inflation. b. Real income is the actual number of dollars received over a period of time. c. The consumer price index (CPI) measures changes in the average prices of consumer goods and services. d. Deflation is an increase in the general level of prices.
An increase in the price of cameras results in a decrease in the demand for film. The two products are
a. complements. b. unrelated. c. defective d. substitutes