The marginal productivity of labor will eventually decrease as more workers are employed because
A) average product is increasing.
B) total product is decreasing.
C) the amount of capital will also be increasing.
D) on the average each worker will have fewer inputs to work with.
Answer: D
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Suppose that the federal budget is balanced when GDP is at potential GDP. If equilibrium GDP falls below potential
A) government transfer payments will be rising and tax receipts will be falling. B) this will result in a current budget deficit. C) the cyclically adjusted budget will be balanced. D) All of the above are correct.
When the price of cable modems decreased from $100 to $85, the number of cable modems produced fell from 1,000 per week to 850 per week. Using this information, we know the supply of cable modems is
A) elastic. B) inelastic. C) unit elastic. D) perfectly inelastic.