Marginal cost eventually increases because
A) of the law of diminishing returns.
B) eventually each additional worker produces a successively smaller addition to output.
C) the marginal product of the variable input eventually falls.
D) All of the above answers are correct.
D
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Which of the following indicates that the average standard of living is rising?
a. Real GDP decreases faster than the price level. b. Real GDP increases faster than the price level. c. The population increases. d. Real GDP increases faster than the population. e. Population increases faster than real GDP.
At the beginning of a year, decision makers expect the general level of prices to increase at a 6 percent annual rate. The CPI increases from 150 to 154.5 during the year; this indicates that
a. decision makers underestimated the rate of inflation during the year. b. decision makers overestimated the rate of inflation during the year. c. decision makers accurately forecast the rate of inflation during the year. d. the rate of inflation during the year was 4.5 percent.