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1. When graphed, a production function displays a


1. Positive relationship between output and the level of technology, ceteris paribus


2. Positive relationship between output and labor inputs, ceteris paribus


3. Negative relationship between output and the level of technology, ceteris paribus


4. Negative relationship between output and labor inputs, ceteris paribus


2. When the value of K = 4 and L = 4 with a production function of \(y = A\left( {{K^{0.5}}{L^{0.5}}} \right),\) output is


1. 80 when A = 5


2. 80 when A = 10


3. 40 when A = 5


4. 40 when A = 10




3. The marginal productivity of labor is


1. The incremental output due to an increase in capital, ceteris paribus


2. The incremental output due to an increase in labor, ceteris paribus


3. The incremental output due to a change in technology, ceteris paribus


4. The incremental output due to a change in technology and a change in the amount of capital




4. The marginal productivity of labor


1. Increases when the price of the good sold increases, ceteris paribus


2. Decreases when there is an adverse supply shock, ceteris paribus


3. Increases when more workers are hired, ceteris paribus


4. Decreases when there is an increase in the quantity of capital, ceteris paribus




5. The marginal revenue product of labor


1. Increases when there is an adverse supply shock, ceteris paribus


2. Increases when there is an increase in the price of output, ceteris paribus


3. Increases when more workers are hired, ceteris paribus


4. Increases when fewer capital units are used with a fixed quantity of labor, ceteris paribus




6. The demand for labor


1. Increases when there is a technolgical advance, ceteris paribus


2. Increases when there is an increase in the supply of labor, ceteris paribus


3. Decreases when fewer labor units are hired, ceteris paribus


4. Decreases when there is an increase in the supply of labor, ceteris paribus




7. Which of the following does not increase ouput?


1. An increaese in the supply of labor, ceteris paribus


2. There is a technological advance, ceteris paribus


3. Government imposes new environmental laws, ceteris paribus


4. There are improved methods for managing economic resources, ceteris paribus




8. Which of the following statements is incorrect?


1. Potential output increases in the short run when there is an increase in the marginal productivity of labor, ceteris paribus


2. Potential ouput increases in the short run when there is an increase in the supply of labor, ceteris paribus


3. Potential output increases when there is a favorable supply shock, ceteris paribus


4. Potential output increases when government passes a law that mandates retirement at the age of 65, ceteris paribus




9. Suppose output over four successive quarters is: 1:1 $350.00; 1:2 $357.00; 1:3 $353.40; 1:4 $346.40; 2:1 $342.90; 2:2 $349.80; 2:3 $360.20; 2:4 $365.60. The economy is in a recession during which of the following quarters?


1. 1:1 through 1:4


2. 1:3 through 2:3


3. 1:1 through 2:2


4. 1:1 through 2:1




10. Which of the following statements is true?


1. An adverse supply shock can cause a recession


2. A substantial increase in the minimum wage can cause a recession


3. A decline in aggregate spending can cause a recession


4. All of the above


5. None of the above