In 2010, Tatum's nominal income rose by 4.6 percent and the price level rose by 1.6 percent. We can conclude that Tatum's real income:
A. may have either increased or decreased.
B. rose by approximately 6.2 percent.
C. rose by approximately 3 percent.
D. fell by approximately 13 percent.
C. rose by approximately 3 percent.
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What is the effect of diminishing returns to labor on the slope of the aggregate production function (where output is measured on the vertical axis and employment is measured on the horizontal axis)?
a. It implies that the slope of the curve increases as the number of workers employed increases. b. It implies that the slope of the curve becomes negative as the number of workers employed increases. c. It implies that the slope of the curve decreases (or becomes flatter) as the number of workers employed increases. d. It keeps the slope the same throughout. e. It has nothing to do with the slope of the aggregate production function.
Where should a producer stop devoting more of his spending on labor if initially the MRP of the additional dollar spent on labor is higher than the MRP of the additional unit spent on tools?
a. MRP/$ of additional labor falls below MRP/$ of additional tools. b. MRP/$ of additional capital increases above MRP/$ of additional tools. c. MRP/$ of additional labor becomes equal to MRP/$ of additional tools. d. MRP/$ of the additional labor falls to zero.