Suppose oil prices fall temporarily, as oil becomes more plentiful. What impact is this likely to have on the production function, the marginal products of labor and capital, labor demand, employment, and the real wage?
What will be an ideal response?
More output can now be produced by the same amounts of capital and labor, since oil is more abundant and cheaper. The production function shifts upward, with the marginal products of labor and capital rising. Since the marginal product of labor is higher, so is labor demand. As a result of the shift to the right in the labor demand curve, employment rises, as does the real wage.
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What is normally the ultimate cause of hyperinflation?
What will be an ideal response?
In the "Interdisciplinary Perspective" titled "A Philosophical Critique on the Marginal Utility of Money," the basic point made is that
a. the law of diminishing marginal utility does not apply to money b. marginal utility always increases at an increasing rate for money c. once basic needs are met, additional income or wealth does not increase happiness d. most of the theories advanced by economists are flawed e. the total utility function for money has a downward slope