If the price of labor is constant and a firm experiences diminishing marginal product, then its
A) marginal costs increase.
B) marginal costs decrease.
C) fixed costs increase.
D) total costs decrease.
Answer: A
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Refer to Figure 23-1. According to the figure above, at what point is aggregate expenditure greater than GDP?
A) J B) K C) L D) none of the above
If a country wants to keep its exchange rate fixed, it must
A) allow its currency value to vary with market supply and demand in foreign exchange markets. B) be a member of the IMF. C) vary the amount of its national currency supplied at any given exchange rate in foreign exchange markets when necessary. D) eliminate its foreign exchange reserves.
If Jim pays $1000 to John: a. GDP will increase by $1000
b. GDP will increase, but we cannot determine by what amount. c. nominal GDP will increase, but we cannot be sure if real GDP will increase or decrease. d. we need more information in order to determine whether or how much GDP will change.
Nominal GDP is
a. also called real GDP. b. a more accurate measure than real GDP. c. real GDP adjusted for changes in the price level. d. GDP measured in current prices.