Which of the following best describes the aggregate production function if output is measured on the vertical axis and the number of workers employed is measured on the horizontal axis? The curve is
a. downward sloping and becomes flatter as the number of workers employed increases
b. downward sloping and becomes steeper as the number of workers employed increases
c. downward sloping with the same slope throughout
d. upward sloping and becomes steeper as the number of workers employed increases
e. upward sloping and becomes flatter as the number of workers employed increases
E
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A headline states: "Real GDP falls again as the economy slumps." This condition is most likely to produce what type of unemployment?
A. natural B. frictional C. structural D. cyclical
The labor supply curve is backward bending because
A) as the wage rate rises, the substitution effect becomes larger than the income effect. B) as the wage rate rises, the income effect becomes larger than the substitution effect. C) an increase in the wage rate shifts the supply of labor curve leftward at higher wages. D) an increase in the wage rate shifts the supply of labor curve rightward at higher wages.
When the marginal cost of a price-taking firm is less than the market price of its product, the firm should:
a. expand output (provided that price is not less than average variable cost). b. reduce output (provided that price is not less than average variable cost). c. maintain output (provided that price is not less than average variable cost). d. charge more than the market price.
Which of the following situations is a clear application of the benefits principle of taxation?
a. wealthier people are taxed more heavily b. heavier vehicles are charged higher tolls on turnpikes c. state government providing a free education to any child in the state d. sales of measles vaccine exempt from sales tax