The law of demand describes the:
A. inverse relationship between price and quantity demanded.
B. direct relationship between income and quantity demanded.
C. inverse relationship between income and quantity demanded.
D. direct relationship between price and quantity demanded.
Answer: A
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If the MPP of labor is positive, the total revenue will grow with each additional worker hired. Yet firms stop hiring before MPP reaches zero because
a. the firm's physical capacity (factory) is limited, that is, the firm's ability to hire is limited by space b. there isn't a sufficient supply of workers at the wage rate paid by the firm c. the wage rate would have to increase, which reduces MPP d. they maximize their gains from hiring at MRP = wage rate and that does not occur at MPP = zero e. marginal revenue product will become negative before MPP does
A permanent reduction in inflation would
a. permanently reduce shoeleather costs and permanently lower unemployment b. permanently reduce shoeleather costs and temporarily raise unemployment c. temporarily reduce shoeleather costs and temporarily lower unemployment d. temporarily reduce shoeleather costs and temporarily raise unemployment
A movement along the consumption function is the result of changes in
a) the real interest rate b) disposable income c) expected future income d) the price level
An externality exists when
A) goods are sold in specific geographic locations. B) some of the benefits or costs associated with a good are borne by third parties. C) the government taxes a good. D) the government subsidizes a good.