Refer to the below graph, where TP = total product and L = labor input. The marginal product of labor (MP):
A. Is constant at all levels of L
B. Increases at an increasing rate as L increases
C. Decreases as the labor input L increases
D. Increases at a decreasing rate as L increases
C. Decreases as the labor input L increases
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Suppose the government reduces its budget deficit at the same time that energy prices rise sharply. Which of the following is most likely to happen?
a. The price level will rise, since higher energy prices increase the cost of production b. Real GDP will fall since both events will tend to cause an economic contraction. c. The price level will fall because the aggregate demand curve has shifted leftward. d. Real GDP will rise as less government spending leads to more opportunities for the private sector. e. Both the price level and real GDP will fall.
Aaron gave up a job in a tire shop that paid $20,000 a year to start his own T-shirt business. The T-shirt company has the following revenues and costs: TR = $60,000 . cost of hiring employees = $40,000 . cost of materials = $8,000 . cost of rent and insurance = $6,000 . According to these data, Aaron's business made a(n)
a. economic profit of $6,000 b. normal profit of $6,000 c. economic loss of $6,000 d. economic loss of $14,000 e. normal profit of $14,000