"Diminishing marginal product is a basic law because new workers are always less qualified than the existing workers." Do you agree or disagree? Explain
What will be an ideal response?
Ans:
Disagree. Diminishing marginal product occurs not because workers are less qualified but because, given fixed some factors of production, each worker will have, on average, fewer of the fixed factors of production to utilize. Output per worker can be raised by increasing those fixed factors of production.
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If absolute PPP held, then the real exchange rate must be equal to
A) a constant. B) one. C) zero. D) a positive number.
When a freely functioning market is in disequilibrium:
a. the government must set a price ceiling. b. the government must set a price floor. c. the price and quantities demanded and/or supplied change until equilibrium is established. d. it will continue to remain in disequilibrium. e. it will reach equilibrium at a very high/low price.