Sample_chapter_12 - Chapter 12: Sample Multiple Choice...

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1.The relationship between labour usage and output at the local Starduck's is summarized in the table below. The price of a cup of espresso is $1.25 and no other inputs are required. L a b o r I n p u t C u p s o f e s p r e s s o 0 0 1 2 5 2 4 5 3 6 0 4 7 0 5 7 5 The marginal product of the third worker is __________ the marginal product of the second worker which means __________. A) greater than; diminishing returns are absent B) less than; diminishing returns are present C) equal to; the third worker will be hired D) less than; diminishing returns are absent E) greater than; diminishing returns are present 2. Lou's marginal product is 12, the firm's output price is $5 and the wage rate is $40. The firm A) will hire Lou. B) may or may not hire Lou. C) will not hire Lou. D) does not have enough information to decide. E) will hire Lou only if he accepts a wage of $35. 3. An increase in the supply of labour coupled with an increase in the demand for labour will result in a(n) __________ wage rate and a(n) __________ employment level. A)
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This note was uploaded on 11/03/2009 for the course ECON 210 taught by Professor James during the Spring '09 term at The University of British Columbia.

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Sample_chapter_12 - Chapter 12: Sample Multiple Choice...

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