Refer to Scenario 7.8 below to answer the question(s) that follow. SCENARIO 7.8: A swimming pool cleaning company has the following production possibilities. With one, two, three, and four workers, the company can clean 5, 12, 17, and 20 pools per day, respectively. Refer to Scenario 7.8. The marginal product of the second worker is
A. 3.
B. 5.
C. 7.
D. 12.
Answer: C
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The U. S. budget has
A. always been in deficit since World War II. B. usually been in deficit, with a few periods of surpluses. C. always in balance. D. in balance, with some period of deficit.
Suppose the government spending multiplier is 1.5. This means that
A) a $1 decline in government spending will raise Real GDP by $1.50. B) a $1 rise in government spending will raise both total spending and Real GDP (assuming prices are constant) by $1.50. C) a $1 rise in government spending will raise investment spending by $1.50. D) a $1 rise in government spending will change interest rates by 1.50 times what it was before the $1 rise in government spending. E) none of the above
When the production of one good spills benefits over to third parties, the government should consider all of the following EXCEPT
A. subsidizing the consumption of the good. B. taxing the production or consumption of the good. C. subsidizing the production of the good. D. creating tax incentives to encourage more consumption.
The marginal cost to society of reducing pollution increases as the level of pollution reduction increases because of the law of
A. Increasing externalities. B. Demand. C. Diminishing marginal utility. D. Diminishing returns.