When firms in a U.S. industry outsource some of their production,
A) both U.S. labor demand and U.S. wages in the industry fall
B) U.S. labor demand falls, but U.S. wages are not affected.
C) U.S. labor demand remains unchanged, but U.S. wages fall.
D) U.S. labor demand falls, but U.S. wages increase.
Answer: A
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The securitization of mortgages was first carried out by
A) Fannie Mae and Freddie Mac. B) WorldCom and Enron. C) the Federal Deposit Insurance Corporation (FDIC). D) Sarbanes-Oxley.
By shutting down, a firm
A) stops receiving revenue but continues to pay variable costs. B) stops receiving revenue and is stuck with its fixed costs. C) avoids its sunk costs as well as its variable costs. D) can avoid paying taxes on its previously earned profits.
Sam loves cookies. She receives 200 utils for one cookie, 360 for two cookies, 490 for the third, 560 for four cookies, and 600 for five cookies. The marginal utility of the third cookie is
A) 130. B) 490. C) 70. D) cannot be determined.
One reason patent protection is vitally important to pharmaceutical firms is
A) successful new drugs are not profitable. If firms are not granted patents many would go out of business and health care would be severely diminished. B) the approval process for new drugs through the Food and Drug Administration can take more than 10 years and is very costly. Patents enable firms to recover costs incurred during this process. C) that taxes on profits from drugs are very high; profits from patent protection enable firms to pay these taxes. D) the high salaries pharmaceutical firms pay to scientists and doctors make their labor costs higher than for any other business. Profits from patents are needed to pay these labor costs.