A firm sells 99 units of output when price equals $10 and 100 units of output when price equals $9. Its marginal revenue for the 100th unit of output is negative.

Which of the following is true in regards to Okun's law?

A) employment does not increase commensurately with output rises because firms tend to hoard labor B) when demand increases, firms tend to work their employees harder and longer C) it is Okun's prediction of the negative relationship between the output and unemployment gaps that allows the modern Phillips curve to be translated into the AS curve D) all of the above E) none of the above

Market failure is a term used to describe what happens when market arrangements do not allocate resources efficiently

a. True b. False Indicate whether the statement is true or false