"Diminishing marginal product is a basic law because new workers are always less qualified than the existing workers." Do you agree or disagree? Explain
What will be an ideal response?
Ans:
Disagree. Diminishing marginal product occurs not because workers are less qualified but because, given fixed some factors of production, each worker will have, on average, fewer of the fixed factors of production to utilize. Output per worker can be raised by increasing those fixed factors of production.
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The housing market crash that accompanied the 2007-2009 recession has had severe negative effects on the U.S. economy. Since December 2008, the target federal funds rate has been 0.0-0.25%
Assuming the Fed keeps the real interest rate constant, a recovery in the housing market would cause the ________, and the output gap would ________. A) MP curve to shift up; become less negative B) MP curve to shift down; become more negative C) IS curve to shift to the left; become more negative D) IS curve to shift to the right; become less negative
According to the simple quantity theory of money, an increase in the money supply will shift the __________ curve to the right and raise __________
A) AD; Real GDP B) AS; the price level C) AD; the price level D) AS; Real GDP E) none of the above
Refer to the graph shown. Assume that the market is initially in equilibrium at a price of $10 and a quantity of 500 units. In equilibrium, producer surplus is equal to:
A. 3,500. B. 1,500. C. 2,500. D. 5,000.
Equilibrium quantity is _____.
