Since the marginal product of labor equals the change in the quantity of output divided by the change in the quantity of labor, it stands to reason that:
a. a firm would never operate in the range where marginal product is negative.
b. a firm would never operate in the range where marginal product is decreasing.
c. marginal product will continually increase as the firm produces more.
d. there is no predictable relationship between marginal revenue and marginal cost.
Ans: a. a firm would never operate in the range where marginal product is negative.
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A theory that has won virtually universal acceptance is a:
A) model. B) hypothesis. C) law. D) variable.
Which of the following explains why the original Phillips curve relation disappeared or, as some economists have remarked, "broke down" in the 1970s?
A) Individuals assumed the expected price level for the current year would be equal to the actual price level from the previous year. B) Individuals assumed that expected inflation would be zero C) Individuals changed the way they formed expectations of inflation. D) Monetary policy became contractionary. E) More labor contracts became indexed to changes in inflation.