What does diminishing marginal product imply?
a. The marginal product of an extra worker is greater than the previous worker's marginal product.
b. The marginal product of an extra worker is less than the previous worker's marginal product.
c. The marginal cost of an extra worker is unchanged.
d. The marginal cost of an extra worker is less than the previous worker's marginal cost.
Ans: b. The marginal product of an extra worker is less than the previous worker's marginal product.
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If at the prevailing real wage rate, the quantity of labor supplied exceeds the quantity demanded
A) there is a shortage of labor. B) the real wage rate will rise to restore equilibrium. C) the real wage rate is greater than the equilibrium real wage rate. D) None of the above answers is correct.
Cross elasticity of demand for
A. substitutes will normally be positive. B. complements will normally be positive. C. substitutes will normally be negative. D. complements will normally be infinite.
Other things equal, an increase in aggregate demand will result in:
a. an economic expansion. b. higher unemployment and a lower equilibrium price level. c. an economic recession. d. a decrease in equilibrium real GDP and an increase in the equilibrium price level. e. a decrease in the overall economic welfare.
Refer to the graph shown. A decrease in aggregate demand in the short run is likely to cause a movement from:
A. B to A. B. B to D. C. C to D. D. C to A.