The marginal revenue product of labor declines as the number of workers increases because
A. firms must lower prices for the final product when they want to sell more units.
B. of the law of diminishing marginal product.
C. of diseconomies of scale.
D. firms hire the most efficient workers first and the least efficient workers last.
Answer: B
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Long-term increases in productivity that have increased the demand for labor, and raised real wages, have resulted primarily from ________ and ________.
A. a modernized capital stock; an increased labor supply B. a modernized capital stock; skill-biased technological change C. technological progress; a modernized capital stock D. technological progress; an increased labor supply
The table above gives the quantity of money and money demand schedules. Suppose that the interest rate is equal to 3 percent. The effect of this interest rate in the money market is that
A) the money market is in equilibrium. B) people buy bonds and the interest rate falls. C) people sell bonds and the interest rate rises. D) bond prices rise so that the interest rate rises.
There has been a decrease in investment. As a result, real GDP will ________ in the short run, and ________ in the long run
A) increase; decrease to its initial value B) decrease; decrease further C) decrease; increase to its initial level D) increase; increase further
Suppose that, given the same number of workers, the United States can produce two times as many TVs or 20 times as many potatoes as Chile. Which of the following statements is true?
A. Chile should trade with the United States for potatoes because the United States has an absolute advantage in the production of potatoes. B. The United States can benefit from trading TVs but not potatoes with Chile. C. Chile should trade with the United States for TVs because the United States has an absolute advantage in the production of potatoes. D. The United States has absolute advantage in producing both goods.