Exhibit 6-1 Production of pizza data
Workers
Pizzas
0
0
1
4
2
10
3
15
4
18
5
19
Exhibit 6-1 shows the change in the short-run production of pizzas as more workers are hired. The table shows the marginal product of the labor input is decreasing with the hiring of the third worker. A possible reason for this diminishing marginal product is:
A. decreases in labor productivity.
B. increases in plant size.
C. decreases in fixed cost.
D. increased division of labor as additional workers are hired.
Answer: A
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If the elasticity measure equals 1.0, then the demand is
A) elastic. B) unit elastic. C) inelastic. D) infinitely elastic.
According to the circular-flow diagram, GDP
a. can be computed as payments firms make to factors of production plus revenues they receive from the sales of goods and services. b. can be computed as the revenue firms receive from the sales of goods and services minus the payments they make to factors of production. c. can be computed as either the revenue firms receive from the sales of goods and services or the payments firms make to factors of production. d. can be computed as the payments firms make to factors of production, but not as revenues they receive from the sales of goods and services.
A reduction in unemployment benefits will
A) not change the amount of frictional unemployment because unemployment benefits affects only structural unemployment. B) increase the amount of frictional unemployment. C) decrease the amount of frictional unemployment. D) increase the amount of cyclical unemployment. E) not change the amount of frictional unemployment because unemployment benefits affects only cyclical unemployment.
If the United States produces the same level of output each year instead of increasing it,
a. the unemployment rate will rise. b. the unemployment rate will remain unchanged. c. the unemployment rate will fall. d. there will be full employment.