Assume that a company is producing at a point beyond where diminishing returns has already set in. If the firm cuts back on production what would you expect should happen to the marginal product of labor and why?
What will be an ideal response?
Marginal product should begin to rise. The reason is that if the firm is already operating beyond the point of diminishing returns this means that marginal product has already begun to fall. So it stands to reason that by cutting back on production the marginal product of labor would rise.
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Compared with the market clearing price of a health care service covered by Medicare, the Medicare program pays a ________ price to health care providers and charges a ________ price to consumers
A) lower, lower B) lower, higher C) higher, lower D) higher, higher
In 2007, the U.S. economy was operating close to potential. The budget deficits experienced by the United States in 2007 was:
A. primarily cyclical deficits. B. primarily structural deficits. C. neither structural nor cyclical deficits. D. about evenly split between structural and cyclical deficits.
Judged by international standards, the national debt of the United States, in terms of its national debt as a percentage of GDP is
A) the highest among the developed nations. B) the lowest among the developed nations. C) above average among the developed nations. D) below average among the developed nations.
Assuming the aggregate supply curve is upward-sloping, which of the following is most likely to occur if the Fed pursues restrictive monetary policy?
A. The equilibrium output will decrease but the price level will stay the same. B. The equilibrium price level and output will both decrease. C. The equilibrium price level and output will both increase. D. The equilibrium price level will decrease but output will stay the same.