Over the past year, output grew 6%, capital grew 2%, and labor grew 4%. If the elasticities of output with respect to capital and labor are 0.3 and 0.7, respectively, how much did productivity grow?
A. 2.0%
B. 3.0%
C. 3.3%
D. 2.6%
Answer: D
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Suppose a negative technological change in the production of disease-resistant wheat caused the price of wheat to rise. Holding everything else constant, how would this affect the market for corn (a substitute for wheat)?
A) The supply of corn would decrease and the equilibrium price of corn would increase. B) The demand for corn would increase and the equilibrium price of corn would increase. C) The demand for corn would increase and the equilibrium price of corn would decrease. D) The demand for corn would decrease because consumers could afford to buy less wheat and corn.
What is the difference between money, income, and wealth?
What will be an ideal response?
A competitive firm maximizes its profits (or minimizes is losses) by producing the quantity where the market price equals the firm's:
A. marginal cost. B. average total cost. C. average variable cost. D. average fixed cost.
A basic criticism of supply-side economics is that:
A. empirical research clearly shows that incentives to work and invest vary directly with marginal tax rates. B. lower taxes will increase aggregate supply much more than they will increase aggregate demand. C. lower taxes will increase aggregate demand much more than they will increase aggregate supply. D. higher taxes will reduce incentives to work, invest, and innovate.