After Suzie, owner of Suzie's Sweet Shop, hires her 8th worker the average product of labor declines. Which of the following statements must be true?
A) The marginal product of the 8th worker is negative.
B) The marginal product of the 8th worker is less than the average product of labor before the 8th worker was hired.
C) Suzie's profits would be greater if she did not hire the 8th worker.
D) The average product of labor is negative.
Answer: B
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As a student, Anne spends 40 hours per week writing term papers and completing homework assignments. On one axis of her production possibilities frontier is measured the number of term papers written per week. On the other axis is measured the number of homework assignments completed per week. Anne's production possibilities frontier is a straight line if
a. she faces no trade-off between writing term papers and completing homework assignments. b. she can switch between writing term papers and completing homework assignments at a constant rate. c. the rate at which she can switch between homework assignments and term papers depends on the number of homework assignments she is completing and on the number of term papers she is writing. d. she is required by her professors to spend half of her time on term papers and the other half of her time on homework assignments.
Which of the following will cause a decrease in producer surplus?
a. the imposition of a binding price ceiling in the market b. an increase in the number of buyers of the good c. income increases and buyers consider the good to be normal d. the price of a complement decreases
The Fed will make a discount loan to a bank during a crisis:
A. but if the bank doesn't have collateral the interest rate is higher. B. no matter what condition the bank is in. C. only if the bank would fail without the loan. D. only if the bank is sound financially and can provide collateral for the loan.
One essential factor for economic growth is:
A. Increasing population growth B. Expanding the role of government C. Using existing resources more efficiently D. Expanding tax-credits for business investment