The multiplier effect suggests that:
A. spending $1 increases GDP by more than $1.
B. spending $1 increases GDP by less than $1.
C. saving $1 increases GDP by more than $1.
D. spending $1 decreases GDP by more than $1.
A. spending $1 increases GDP by more than $1.
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Assume that both the goods and the labor market are perfectly competitive. If at equilibrium, the marginal cost faced by a firm is $3 and the market wage rate is $6, the marginal product of the last unit of labor hired by the firm must be:
A) 0.5 units. B) 2 units. C) 9 units. D) 18 units.
Half of all your potential customers would pay $10 for your product but the other half would only pay $8 . You cannot tell them apart. Your marginal costs are $4 . If you set the price at $10, the expected profit is:
a. $3 b. $4 c. $5 d. $6