Suppose Coke and Pepsi are perfect substitutes.
a. Derive the shape of the (uncompensated) demand curve.
b. Derive the shape of the compensated demand (or MWTP) curve.
What will be an ideal response?
b. The compensated demand curve is the horizontal portion of the uncompensated demand curve graphed above.
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If aggregate planned expenditure exceeds real GDP, then
A) unplanned inventory changes are positive. B) real GDP will decrease. C) aggregate planned expenditure must decrease to restore the equilibrium. D) planned inventory changes must be negative. E) unplanned inventory changes are negative.
When labor is a firm's only variable input in its production process, a profit-maximizing firm will continue to employ additional workers as long as: a. the marginal product of labor > 0
b. the marginal revenue product of labor < the marginal resource cost. c. the marginal revenue product of labor > the marginal resource cost. d. none of the above.
In the income-expenditure model, at equilibrium GDP
a. either unemployment or inflation may occur. b. inflation can occur but unemployment cannot. c. unemployment can occur but inflation cannot. d. both unemployment and inflation are impossible.
Three employers have justified their actions as follows. Whose logic is not consistent with the logic of efficiency wage theory?
a. Instead of spending money on an electronic timing system that monitors worker hours, Tom spends an equivalent amount of money on higher wages. b. Dick pays his workers less than the equilibrium wage so that they will not have the time or money to look for work somewhere else. c. Harry pays his workers in a developing country more than the going wage hoping that they will get a better diet and so be more productive. d. None of the above is consistent with the logic of efficiency wage theory.