Explain why the marginal product of labor shown in Moe’s Production Function with One Variable, Labor, is higher with two employees than it is with six.
What will be an ideal response?
The marginal product of labor is the increase in production that comes from adding an employee. In this example, adding a second worker leads to a large increase in bagel production. However, by the time a sixth worker is added, the shop is already operating at near capacity, and the additional worker can only provide a small increase in production.
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A sales tax is a tax on the:
A. earnings of individuals and corporations. B. income earned by buying investments and selling them at a higher price. C. wages paid to an employee. D. value of a good or service being purchased.
Which of the following would be included in the calculation of the GDP for the year 2010?
a. Purchase of a 2004 model Volkswagen sedan in 2010 b. Swapping of baseball cards among two college students c. Car repairs done by a person d. Fresh lemonade sold at a local diner e. A lamp sold at a garage sale
When Fed policy is addressing either a contractionary or inflationary gap, interest rates will be changed in the same direction as the intended change in real GDP
a. True b. False Indicate whether the statement is true or false
Suppose the Fed forecasts a reduction in excess reserve holdings by banks. It might offset the effect of this on the money supply by
A) buying government securities. B) lowering the required reserve ratio. C) lowering the discount rate. D) selling government securities. E) a, b, and c