Expectations that the price level will increase in the future will _____
Fill in the blank(s) with the appropriate word(s).
shift the current consumption function upward.
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The law of diminishing returns states that as
A) the size of a plant increases, the firm's fixed cost decreases. B) the size of a plant increases, the firm's fixed cost increases. C) a firm uses more of a variable input, given the quantity of fixed inputs, the marginal product of the variable input eventually diminishes. D) a firm uses more of a variable input, given the quantity of fixed inputs, the firm's average total cost will decrease eventually.
A good salesperson can sell $500,000 worth of goods, while a poor one can sell only $100,000 worth of goods. Job applicants know if they are good or bad, but the firm does not
A firm will offer job applicants a choice between a fixed salary of $10,000 or a 10% commission. Assuming risk-neutral salespersons and no opportunistic behavior, can the firm determine a prospective good salesperson from a poor one? A) Yes, because a poor salesperson will always choose the fixed salary. B) Yes, because a good salesperson will always choose the fixed salary. C) No, because a poor salesperson is indifferent between the two contracts. D) No, because a good salesperson is indifferent between the two contracts.