From Equation (7.1 ) in the book, the short-run marginal cost of production is MC = w/MPL. Based on this equation, which of the following statements is NOT true?
A) If the marginal product of labor is constant, then MC is constant.
B) If the marginal product of labor is a concave curve, then the MC curve is also concave.
C) If the marginal product of labor is a concave curve, then the MC curve is U-shaped.
D) MC increases as the marginal product of labor declines.
B
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The demand curve for each seller's product in perfect competition is horizontal at the market price because
A) all the sellers get together and set the price. B) all the demanders get together and set the price. C) the price is set by the government. D) each seller is too small to affect market price.
The difference between the exchange value of a money and its cost of production is defined as
A) seigniorage. B) net value. C) net exchange profit. D) the face value.
Trading partners should specialize in producing goods in accordance with comparative advantage, then trade and diversify in consumption because
a. out-of-pocket costs of production decline b. free trade areas protect infant industries c. economies of scale are present d. manufacturers face diminishing returns e. more goods are available for consumption
In the short-run, an increase in the average price level in the economy will cause:
a. demand for a good to increase but total production to decline. b. profits to rise and thus, total production to increase. c. interest rates to fall and thus, total production to decline. d. input costs to fall and thus, total production to rise. e. input costs to fall and thus, total production to decline.