The marginal products of the first, second, and third workers are 20, 12, and 8, respectively. If four workers can produce 45 units of output, then the marginal product of the fourth worker is
A. 4.
B. 5.
C. 40.
D. 45.
Answer: B
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
Assume that GDP = $10,000 and the MPC = 0.75. If policy makers want to increase GDP by 30 percent, by how much should they increase government spending?
A) $300 B) $750 C) $1,000 D) $3,000
When represented graphically, the government's demand for funds curve is
a. downward sloping b. upward sloping c. vertical d. initially downward sloping, then upward sloping e. initially rightward sloping, then downward sloping
Assume that full-employment national income is Y = $1,200 billion, the current equilibrium national income is Y = $1,600 billion, and the MPC = 0.8 . In order to bring the economy to a full-employment national income,
a. the recessionary gap can be closed by increasing aggregate expenditure by $80 billion b. the inflationary gap can be closed by cutting aggregate expenditure by $80 billion c. nothing is needed to bring the economy into full employment equilibrium d. the recessionary gap can be closed by increasing aggregate expenditure by $400 billion e. the inflationary gap can be closed by cutting aggregate expenditure by $400 billion