Hooterville's Chamber of Commerce has been successful in its campaign to attract manufacturing firms ("Locate here, we give a hoot!") and the community has experienced an increased average wage rate. Why?
a. The new firms like residents of Hooterville.
b. Labor costs more in other communities.
c. Hooterville has a nice train station.
d. The supply of labor has changed.
e. The demand for labor has changed.
E
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State the law of diminishing returns. How do diminishing returns differ from diseconomies of scale? Be sure to define diseconomies of scale in your answer
What will be an ideal response?
Suppose that there are diminishing returns to capital. Suppose also that two countries are the same except one has more capital per worker and so it has more real GDP per worker than the other. Finally, suppose that the saving rate in both countries increases from 4 percent to 7 percent. Over the next ten years we would expect that
a. the growth rate will not change in either country. b. the country that started with less capital per worker will grow faster. c. the country that started with more capital per worker will grow faster. d. both countries will grow and at the same higher rate.
According to your authors, America's Great Depression of the 1930s was evidence of
A) an unstable free market system
B) rampant greed among entrepreneurs.
C) a cluster or accumulation of errors.
D) antagonistic interests among the propertied and nonpropertied classes.
E) all of the above.
Which of the following is NOT an assumption of the classical model?
A. Households want to maximize economic well being. B. Wages and prices will move freely in the upward direction but not the downward direction. C. Buyers and sellers react to changes in relative prices. D. No single buyer or seller of a commodity can affect its price.