Marginal revenue product falls as more labor is hired because
A) the price of the product must fall for a perfectly competitive firm to sell more.
B) the marginal product of labor is negative as additional units of labor are hired.
C) the wage rate rises as more workers work more hours.
D) the marginal product of labor falls as a result of the law of diminishing returns.
D
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In the model of perfect competition,
A) all firms earn zero economic profit in the long run. B) all firms use the lowest-cost technologies. C) all firms take the prevailing market price as given. D) all participants fully exhaust any potential gains from trade. E) all of the above occur.
If demand is elastic, a rise in price will decrease total expenditure.
Answer the following statement true (T) or false (F)
Consumption spending is $5 million, planned investment spending is $8 million, unplanned investment spending is $2 million, government purchases are $10 million, and net export spending is $2 million. What is aggregate expenditure?
A) $15 million B) $23 million C) $25 million D) $27 million
In the quantity theory of money:
A. the price level is a function of the supply of money. B. the supply of money is a function of the price level. C. the money supply and the price level are inversely related. D. the money supply is controlled by the government.