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1. The production function is upward sloping since it shows: Amount of output produced as input rises. The additional output produced as input rises. 2. The MPN (marginal product of labor) captures The contribution to output from an additional unit of labor. The total contribution to output from all labor. 3. The MPN curve is downward sloping. It shows the: Amount of output produced as input rises. The additional output produced as input rises. 4. Firms' objective when choosing optimal labor is to: Maximize profits. Maximize output. 5. Firms choose the optimal level of labor to hire by setting: MPN=w MPN=W MPN=P MPN=P/W 6. If workers become more productive: MP becomes larger than w, and so firms hire more labor to raise profits; Nd shifts outwards. MPN becomes smaller than w, and so firms hire less labor to raise profits; Nd shifts inwards. 7. Workers are willing to supply more labor according to the substitution effect when Real wage rises. Real wage falls. 8. Workers are willing to supply more labor according to the income when Real wage rises. Real wage falls. 9. According to the substitution effect, a worker will supply less labor when the real wage falls because The opportunity cost of leisure is low The worker feels less well off10. Workers are willing to supply more labor, causing the Ns curve to shift outwards, when A new law requires that workers be at least 18 years of age (instead of 16 years of age). A new law increases the retirement age to 70 (instead of 65). 11. When the labor market is in equilibrium: The labor supplied equals labor demanded. The labor supplied equals the real wage. 12. When the labor market is in equilibrium The economy is at full-potential level of output The economy is not at full-potential level of output 13. If workers become more productive then: Full-employment and real wage rise; full-employment level of output (Y_bar) rises which is shown a shift and a movement-along the production function. Full-employment and real wage rise; full-employment level of output (Y_bar) rises which is shown only as a movement-along the production function. 14. True/False: Y_bar is the amount of goods and services produced (i.e. supplied) in the economy in the long run