Does the law of diminishing returns apply to capital as well as labor? Explain why or why not
What will be an ideal response?
The law of diminishing returns applies to capital as well as labor. The marginal product of capital is the change in the total product resulting from a one-unit increase in capital, holding the quantity of labor constant. As the quantity of capital increases for a given level of labor, the first units of capital will increase output substantially. But as capital continues to increase, eventually the increase in production starts to get smaller and diminishing returns to capital are occurring.
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The Monetarist model expands the Keynesian model by proposing that
A) decreases in the quantity of money lead to higher interest rates. B) the government should lower taxes promote economic growth. C) decreases in tax rates generate higher consumption. D) decreases in the growth rate of the quantity of money trigger expansions by controlling inflation. E) markets should be left alone to determine the optimal outcome.
Perfect price discrimination
A) turns all the producer surplus into consumer surplus. B) turns all the consumer surplus into economic profit. C) creates a deadweight loss. D) cannot result in profit maximization.
The consumer confidence index can be defined as:
a. an economic index that measures how consumers feel about their government. b. an economic index that measures how confident companies are about keeping their current consumers. c. an economic index that measures household expectations about the economy. d. an economic index that measures how investors feel about their investments in the stock market. e. an economic index used to measure consumers' confidence on a particular brand.
If the nominal exchange rate were to be expressed as the number of units of domestic currency per unit of foreign currency, and that rate decreases, then the domestic currency has:
A. appreciated. B. depreciated. C. become undervalued. D. become overvalued.