Because of the law of diminishing returns, as additional workers are hired, total output
A. Rises at a diminishing rate initially and eventually falls.
B. Falls at a diminishing rate at all output levels.
C. Rises at a constant rate at all output levels.
D. Falls at an increasing rate at all output levels.
Answer: A
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Suppose that smoking creates a negative externality. If the government does not interfere in the cigarette market, then
a. the equilibrium quantity of cigarettes smoked will equal the socially optimal quantity of cigarettes smoked. b. the equilibrium quantity of cigarettes smoked will be greater than the socially optimal quantity of cigarettes smoked. c. the equilibrium quantity of cigarettes smoked will be less than the socially optimal quantity of cigarettes smoked. d. There is not enough information to answer the question.
If the cross-price elasticity between ketchup and hamburgers is ?2.5, a 2 percent increase in the price of ketchup will lead to a:
A. 5 percent drop in quantity demanded of hamburgers. B. 5 percent drop in quantity demanded of ketchup. C. 5 percent increase in quantity demanded of hamburgers. D. 5 percent increase in quantity demanded of ketchup.
Because resources are scarce, economists would say that
A) people's wants are unlimited. B) anything worth doing is worth doing well. C) every choice has an opportunity cost. D) there are no benefits from cooperation. E) the best things in life are always free.
Refer to Figure 7-2. Without the tariff in place, the United States consumes
A) 12 million pounds of coffee. B) 26 million pounds of coffee. C) 33 million pounds of coffee. D) 45 million pounds of coffee.