Which of the following is a characteristic of a competitive price-taker market?
A. Profit maximizing firms in the market will expand output until price equals average variable cost.
B. The market demand curve for the product is a horizontal line.
C. There are many firms in the market, each producing a small share of total market output.
D. The product produced by each of the firms is differentiated.
Answer: C
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The value of the marginal product of labor is given by:
A) the ratio of the marginal product of labor to the wage rate. B) the product of the marginal product of labor and the wage rate. C) the ratio of the marginal product of labor to the price of the final good produced. D) the product of the marginal product of labor and the price of the final good produced.
The economy is in long-run equilibrium when government unexpectedly increases aggregate demand. The expected inflation rate is slow to adjust to the higher (actual) inflation rate. If follows that in the short run, according to the Friedman natural rate theory, __________ rises and the __________ falls
A) the unemployment rate, price level B) Real GDP rises, unemployment rate C) nominal interest rate, real interest rate D) the unemployment rate, Real GDP level E) none of the above