“To reduce agricultural output by a certain percent, an even larger percent reduction in acres planted is required.” Explain
What will be an ideal response?
This statement refers to the fact that if farmers cut back acreage planted by 10%, for example, they will probably not plant the 10% of their acres that are least productive. Thus, their total output will not fall by 10%. There would also be an incentive to try to increase productivity on the remaining 90% of the planted acres by farming more intensively, using more fertilizer, and so on. Thus, a reduction in acreage planted does not guarantee a proportionate reduction in output.
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Elasticity measures are preferred by economists to measures of slope when analyzing changes in the quantity of a good consumers purchase because
a. they are harder to calculate. b. the measure of slope is dependent upon the units of measurement, elasticity is not. c. the measure of slope does not have any units of measurement, elasticity does. d. elasticity measures depend upon the type of currency, slope does not.
If a union raises the wage in its industry above equilibrium, then there is an increase in
a. structural unemployment which is part of cyclical unemployment. b. structural unemployment which is part of the natural rate of unemployment. c. frictional unemployment which is part of cyclical unemployment. d. frictional unemployment which is part of the natural rate of unemployment.
A large negative output gap
a) represents a shortage of goods due to excessive demand for output b) is the result of overtime work by the labor force c) creates inflation d) means the business cycle is at a peak e) implies excessive unemployment
The market supply curve for labor is the relationship between the wage and the quantity of labor that:
A. all workers are willing to provide. B. any given worker is willing to provide. C. all firms are willing to employ. D. any given firm is willing to employ.