A soda factory employs seven workers and produces 500 bottles of soda a day. The company reduces the workforce to six workers and output is now 450 bottles a day. The seventh worker:
A. had a lower marginal product than the sixth worker.
B. caused average product to fall.
C. had a marginal product of 50 bottles of soda.
D. All of these are true.
Answer: D
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Foreign direct investment is
A) the purchase of less than 10 percent of the shares of ownership in a company in another country. B) the purchase of more than 10 percent of the shares of ownership in a company in another country. C) the diversification of purchasing shares in many companies in one country so that risk is kept to a minimum. D) the diversification of purchasing shares in one company in many countries so that risk is kept to a minimum.
Suppose the current account of a country is initially in balance. A new transaction occurs so that the current account is now in surplus. Official reserve balance is maintained before and after the transaction occurs. From this, we know that
A) the balance of trade is now in surplus. B) the balance of goods and services is now in surplus. C) the capital account is now in deficit. D) the government must make official reserve transactions.
Jason spends all afternoon baking a cake. When it comes out of the oven, it's burnt and sunk in the middle. Jason thinks about all the time he invested in making it and decides he'll spend more time frosting it and eat it anyway, even though it tastes pretty terrible. Jason's decision to continue to decorate and eat the cake is a good example of:
A. someone focusing on sunk costs. B. someone ignoring sunk costs. C. someone thinking marginally. D. someone weighing the opportunity costs of frosting and eating the cake and the benefits of doing so.
If the marginal propensity to save (MPS) is 0.10, the value of the spending multiplier is:
a. 1. b. 9. c. 10. d. 90.