Product Curve

Suppose that you have drawn a total product curve for labor given a specific technology. Now let some sort of technological change increase the productivity of labor. A new total product curve would have to be drawn: A) above the old with a steeper slope for any level of employment greater than zero. B) above the old with a flatter slope for any level of employment greater than zero. C) below the old with a steeper slope for any level of employment greater than zero. D) below the old with a flatter slope for any level of employment greater than zero. E) directly over the old curve signifying no change in the total product graph; only the marginal product graph would chan... click for more

Cost & Efficiency

88. If it is true that handling the mail does not get cheaper as the volume of mail increases, which of the following best explains this fact? A) The Post Office is run by the government and therefore is inefficient. B) The rule "the bigger the volume, the lower the cost" is true only if other things remain the same; since technological knowledge changes constantly, the cost of handling mail need not fall. C) Although the rule "the bigger the volume, the lower the cost" is true of most industries, it is not true of all of them. D) The rule "the bigger the volume, the lower the cost" is true only up to a point, beyond which costs rise. E) The rule "the bigger the volume, the lo... click for more

Production Possibility Frontier

The production-possibility frontier of a country can be said to shift outward as a result of the following. Which, if any, is the wrong explanation? A) Expenditures on new plants and equipment are constantly being made. B) The population increases. C) Better methods of production are developed. D) New oil finds are made. E) All of the above are valid explanations

Price

29. A shortage of OPEC oil raises oil prices because of: A) the law of elastic supply. B) the law of elastic demand. C) the downward-sloping demand curve. D) all of the above. E) none of the above.

Excise tax - supply curve

The government levies an excise tax of 5 cents per unit sold on the sellers in a competitive industry. Both supply and demand curves have some elasticity with respect to price. This tax means that the: A) supply curve shifts to the left by 5 cents, but (unless demand is perfectly elastic) price will not rise. B) supply curve shifts to the left by less than 5 cents, but (unless demand is highly elastic) price will rise by the full five cents. C) supply curve shifts to the left by less than 5 cents, but (unless demand is highly inelastic) price will rise by more than 5 cents. D) supply curve shifts to the left by 5 cents, but (unless supply is perfectly elastic) any price rise wi... click for more