Draw a production possibilities frontier for an economy, with the axes labeled “military goods” and “peace goods.” Indicate the region that is attainable and the region that is not. Explain the shape of the curve. What assumptions did you make in drawing it?
What will be an ideal response?
The curve should look like the figures in the text. The portion below and to the left of the curve is attainable, the area above and to the right of the curve is not attainable. The shape should be bowed out from the origin, based on the principle of increasing cost. This is based upon the assumption that resources used in the production process are better suited in one application than in another.
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If 10 workers will be hired by a firm at a wage rate of $15 per hour, but the 11th worker will be hired only if the wage rate falls to $14 per hour, then the marginal wage of the 11th worker is
A. $14 per hour. B. -$1 per hour. C. $154 per hour. D. $4 per hour.
Briefly explain the components that make up the increase in producer surplus when there is a rise in price.
What will be an ideal response?
Which description of capitalism was coined by Karl Marx?
A. The capitalist is led by an invisible hand to promote an end which was no part of his intention. B. By pursing his own interest he frequently promotes that of the society more effectively than when he really intends to promote it. C. The factory owner, by paying his workers meager wages, is able to use this surplus to buy more capital goods. D. None of these statements were coined by Karl Marx.
Firms that employ statistical discrimination in the labor market will earn higher profits in expectation than firms that do not discriminate (and have no effective screens).
Answer the following statement true (T) or false (F)