If the law of diminishing returns applies to labor then A) the marginal product of labor must eventually become negative. B) the average product of labor must eventually become negative. C) the marginal product of labor must rise and then fall as employment rises. D) the average product of labor must rise and then fall […]
According to figure 1.1, the favorite explanation for continuing poverty in America was “lack of effort” by the poor. Indicate whether the statement is true or false ANSWER T
If current output is less than the profit-maximizing output, then the next unit produced A) will decrease profit. B) will increase cost more than it increases revenue. C) will increase revenue more than it increases cost. D) will increase revenue without increasing cost. E) may or may not increase profit. ANSWER C
For some fisheries in the U.S., the state or federal government imposes “gear restrictions” that limit the size of boats, nets, or other equipment that may be used to harvest the fish in a given body of water. The purpose of the gear restrictions is to: A) prevent everyone from using the common property resource […]
Assume that both high and low quality appliances are sold in the used appliance market. If we assume asymmetric information with sellers having more information regarding quality than buyers, which of the following is necessarily true? The A) fraction of high quality appliances will be greater than under perfect knowledge. B) fractions of high and […]
Which of the following is true about the game in Scenario 13.2? A) ABC’s dominant strategy is to offer a rebate. B) ABC’s dominant strategy is not offer a rebate. C) XYZ’s dominant strategy is to offer a rebate. D) XYZ’s dominant strategy is not offer a rebate. E) Both ABC and XYZ offer a […]
Most Americans believe that anyone who is poor can get rich by working hard. Indicate whether the statement is true or false ANSWER T
Consider the following statements when answering this question. I. If no consumer has a kinked demand curve for CDs, then the market demand curve for CDs cannot be kinked either. II. If at a price of $10, every consumer has inelastic demand, then at that price the market demand for CDs will be inelastic too. […]
Microsoft wants to calculate the effect of a worldwide 5% price cut on its sales of Excel to clients in different countries. Microsoft sells Excel at different prices in U.S., Japan and Europe. Before the price cut U.S. sales were twice sales in Japan and Europe. If the price of elasticity of demand in the […]
At a given level of labor employment, knowing the difference between the average product of labor and the marginal product of labor tells you A) whether increasing labor use raises output. B) whether increasing labor use changes the marginal product of labor. C) whether economies of scale exist. D) whether the law of diminishing returns […]
