Which of the following is NOT a determinant of an individual's marginal product?
A) talent
B) money income
C) experience
D) educational level
Answer: B
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Economists who believe the supply-side effects of tax cuts are small essentially believe that
A) tax cuts mainly affect aggregate demand. B) tax cuts will result in relatively small changes in the price level. C) tax cuts mainly affect aggregate supply. D) tax cuts will increase the quantity of labor supplied.
The Department of Education noticed that for loans granted to students without any strings, the average grade point average of the students decreases dramatically over time, while the students whose loans renew only if they pass their courses tends to stay stable. This could be due to a
a. Adverse selection problem b. Moral hazard problem c. Typical college life phenomenon d. None of the above
Juanita is trying to convince the owner of a jewelry store to hire her. She argues that she could help the shop sell an additional three rings per day for a profit of $20 each. If the facts are not in dispute, but the owner does not hire her, then
a. the wage rate must be less than $60 per day. b. hiring Juanita would involve a negative marginal product. c. the wage rate must be more than $60 per day. d. the wage rate must be less than $20 per day.
Applied to perfectly competitive labor markets, the marginal principle tells firms to hire workers until:
A. the marginal revenue product of the last worker hired equals the wage. B. marginal productivity begins to diminish. C. average total costs are minimized. D. the price of the product equals the wage of the worker.