In the one-input model, the marginal product of labor curve falls below the horizontal axis only if the production frontier slopes down.
Answer the following statement true (T) or false (F)
True
Rationale: The marginal product of labor is the slope of the production frontier. The only way the marginal product of labor curve can become negative is therefore for the production frontier to slope down.
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Consider a downward-sloping demand curve. When the price of an inferior good decreases, the income and substitution effects
A) work in the same direction to increase quantity demanded. B) work in the same direction to decrease quantity demanded. C) work in opposite directions and quantity demanded increases. D) work in opposite directions and quantity demanded decreases.
Last year you purchased 20 shirts at $15 apiece, 30 CDs at $12 each, and 5 sweaters at $25 apiece. This year you buy 20 shirts at $20 apiece, 30 CDs at $12 apiece, and 5 sweaters at $20 a apiece. If last year's index was 100, this year's index is
A) 91.3. B) 102.0. C) 109.5. D) 9.5.
For a competitive market,
a. a seller can always increase her profit by raising the price of her product. b. if a seller charges more than the going price, buyers will go elsewhere to make their purchases. c. a seller often charges less than the going price to increase sales and profit. d. a single buyer can influence the price of the product but only when purchasing from several sellers in a short period of time.
A temporary supply shock, such as a one month decrease in oil prices, would
A. decrease the marginal product of capital and decrease desired investment, decreasing the real interest rate in equilibrium. B. have little or no effect on desired investment, thus not changing the real interest rate by much in equilibrium. C. increase the marginal product of capital and increase desired investment, increasing the real interest rate in equilibrium. D. increase both the marginal product of capital and the marginal product of labor in the long-term future, thus raising the real interest rate in equilibrium.