A reduction in workers' marginal productivity would result in:
A. a reduction in the equilibrium wage rate.
B. a decrease in labor supply.
C. an increase in labor demand.
D. an increase in equilibrium employment level.
Answer: A
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
BAE, a British defense company, has the contract to produce Tornado aircraft for the Royal Air Force. BAE is producing the aircraft at the lowest possible cost. If the RAF orders one more Tornado, there will be
A) a decrease in opportunity costs as average costs decrease. B) a misallocation of resources. C) an increase in opportunity cost for Tornados. D) an outward shift in the PPF.
Refer to Table 4-1. The table above lists the highest prices three consumers, Curly, Moe, and Larry, are willing to pay for a bottle of champagne. If the price of one of the bottles is $95 dollars, total consumer surplus will be
A) $0. B) $35. C) $80. D) $95.
Explain the effect of right-to-work laws on the collective bargaining power of labor unions