Gross domestic product adds together many different kinds of goods and services into a single measure of the value of economic activity. To do this, GDP makes use of
a. market prices.
b. statistical estimates of the value of goods and services to consumers.
c. prices based on the assumption that producers make no profits.
d. the maximum amount consumers would be willing to pay.
a
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The profit-maximizing rule for a perfectly competitive firm when choosing its level of output is to produce where price is equal to marginal cost
The profit-maximizing rule for a firm hiring labor in a perfectly competitive labor market is to hire workers up to the point where the marginal revenue product equal to the market wage. How are these two rules related to one another?
New Keynesians and new classical economists both believe that
a. people form their expectations rationally. b. aggregate demand movements primarily drive business cycles. c. individual agents engage in optimizing behavior. d. The key source of disagreement centered around how people form their expectations. e. all but d are correct.
Refer to the above table. How many workers will this firm hire if the weekly wage rate is $770?
A. 28 B. 27 C. 29 D. 26
The bowed shape of the per-worker production function is caused by
A. increasing marginal productivity of capital. B. wealth effects that reduce labor supply. C. diminishing marginal productivity of capital. D. increasing marginal productivity of labor.