The change in output resulting from the addition of one more worker is
A) marginal physical product.
B) marginal revenue product.
C) average physical product.
D) average revenue product.
Answer: A
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If a firm hires one worker and eliminates four units of capital, and hires one more worker and replaces three more units of capital, keeping output constant, then
A) workers and capital are perfect substitutes. B) the firm is operating inefficiently because capital is more efficient than workers. C) the firm is experiencing a diminishing marginal rate of technical substitution. D) there are decreasing returns to scale.
In the long run, all inputs are variable
a. True b. False
Suppose that in a new classical model the public anticipates that policymakers will increase aggregate demand. However, aggregate demand increases by less than what the public anticipated. The result in the short run is that Real GDP ____________ and the price level ____________
A) decreases; decreases B) increases; increases C) increases; decreases D) decreases; increases
Generally, if a nation produces more consumer goods than capital goods
A. more of all goods may be produced in the future. B. about the same amount of capital goods may be produced in the future as are being produced today. C. less of all goods may be produced in the future. D. society will have to forego future consumption of capital goods.