Suppose the marginal product of labor equals 1/L. If the wage is $1 per unit of labor, what is the short-run effect on the firm's labor demand if the price of output were to double?
A) The firm will demand half as much labor.
B) The firm will demand twice as much labor.
C) The firm will demand the same quantity of labor.
D) There is not enough information to determine.
B
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
Which of the following is not a reason why unionized firms can successfully compete with nonunionized firms?
A. Unionized firms are legally protected from price competition with nonunionized firms. B. Employee morale may be higher at unionized firms, so workers are more productive. C. Labor turnover is lower at unionized firms, so unionized firms have lower hiring costs. D. Communication between management and workers is better at unionized firms.