If an increase of $10 billion of investment results in an increase in equilibrium expenditure of $40 billion, the multiplier equals
A) $10 billion ÷ $40 billion = 0.25.
B) $40 billion - $10 billion = $30 billion.
C) $10 billion × $40 billion = $400 billion.
D) $10 billion - $40 billion = -$30 billion.
E) $40 billion ÷ $10 billion = 4.
E
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According to the efficiency wage model, firms will pay the real wage that
A) maximizes workers' marginal productivity. B) maximizes the marginal productivity of capital and the marginal productivity of labor together. C) maximizes effort per dollar of real wage. D) minimizes hiring and training costs to the firm.
If a particular production process is subject to diminishing marginal returns to labor at every level of output, then at every level of output
A) AC is upward sloping. B) MC exceeds AVC. C) AFC is constant. D) All of the above.
Economic profit always equals
a. zero for a perfect competitor b. zero for a monopolist c. total revenue – total cost d. total revenue – explicit costs e. total revenue – implicit costs
Software companies continually work to develop new features of their products that make it easier for users to interact and share their work. As more of these features are embedded in the software, what happens to the individual demand curve for the software products?
A. Demand curve becomes more elastic due to the bandwagon effect. B. Demand curve shifts, but its degree of elasticity does not change. C. There is no change in the individual demand curve. D. Demand curve becomes less elastic due to the snob effect.