Which of the following statements is true?
a. Marginal revenue product is the extra revenue generated to the firm from the production of one more unit of output.
b. Marginal factor cost is the extra cost to a firm of employing one more unit of a factor of production.
c. The demand curve for a perfectly competitive employer is horizontal at the market wage rate.
d. The supply curve of labor is upward sloping because of the law of diminishing marginal productivity.
QUESTION 2Gross domestic product (GDP) is a poor measure of social well-being because:
a. the value of leisure time is included in GDP accounting.
b. the revenue earned through exports is ignored.
c. each dollar of government spending is valued at less than one-half of private spending.
d. consumer spending is more important than business spending and should be considered more valuable.
e. it values products at their market prices but ignores services produced.
QUESTION 3Fiscal policy is likely to fail to correct stagflation in an economy because:
a. it affects both aggregate demand and supply, although only aggregate supply needs to be changed.
b. it affects both the aggregate demand and supply, although only aggregate demand needs to be changed.
c. it affects aggregate demand only, although aggregate supply needs to changed.
d. it affects aggregate supply only, although only aggregate demand needs to be changed.
e. it affects either aggregate demand or aggregate supply, although both need to be changed simultaneously.
QUESTION 4The existence of the underground economy causes gross domestic product (GDP) statistics to _____.
a. understate the true volume of economic activity
b. overstate the aggregate price level in the economy
c. overstate the standard of living
d. overstate the profit of firms
e. understate government spending in an economy
QUESTION 5The best number of workers for any employer to hire is that quantity in which:
a. the marginal revenue product equals the marginal factor cost.
b. the marginal revenue product exceeds the marginal factor cost.
c. total costs are minimized.
d. total revenue is maximized.
e. none of these
QUESTION 6Which of the following best describes stagflation?
a. Rising unemployment together with economic growth
b. Deflation coupled with a decline in money supply
c. Deficits coupled with rising unemployment
d. Rising unemployment and high inflation rates
e. Inflation coupled with balance of trade deficits
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