In economic theory, if an additional worker adds less to the total output than previous workers hired, it is because
A) there may be less that this person can do, given the fixed capacity of the firm.
B) he/she is less skilled than the previously hired workers.
C) everyone is getting in each other's way.
D) the firm is experiencing diminishing returns to scale.
A
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If Sally drives less carefully after buying auto insurance, she illustrates
A) adverse selection. B) negative selection. C) moral hazard. D) lemon hazard.
When demand is elastic, a fall in price causes total revenue to rise because
A) the percentage increase in quantity demanded is less than the percentage fall in price. B) the demand curve shifts. C) when price falls, quantity sold increases so total revenue automatically rises. D) the increase in quantity sold is large enough to offset the lower price.
An example of a good or service that would not count in the U.S. GDP would be:
A. a car made by Toyota in Tennessee. B. a car made by Ford in Michigan. C. sneakers made by Nike in Indonesia. D. sneakers made by New Balance in Ohio.
Critics of inflation targeting will argue that central banks need flexibility
a. True b. False Indicate whether the statement is true or false