How can a firm have a negative valued added, as supposedly some state-owned businesses did in the former Soviet Union? What has to be true for value added to be negative?
What will be an ideal response?
A negative value added means that the cost of the intermediate goods exceeds the price of the final product produced using the intermediate goods. For value added to be negative, a firm would use its primary factors of production, such as labor and capital equipment, to produce a product from the intermediate goods that is less valuable than the intermediate goods themselves.
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The value of a worker's marginal product:
A) is the increment in total cost of a firm when the worker is hired. B) is the additional revenue that the worker brings in to the firm. C) is the maximum price at which a product can be sold in a market. D) equals the average product of a firm divided by the marginal product of the worker.
The progressive income tax is an automatic stabilizer with respect to the Federal government's budget surplus or deficit because
A) individuals must "automatically" pay taxes even when they have a deficit. B) during periods of output growth, a greater percentage of real income "leaks" from the expenditure stream. C) during periods of output growth, the marginal leakage rate increases as taxes decrease. D) None of the above.
If an increase in the price of good X causes the demand curve for product Y to shift to the right, then X and Y are most likely to be which of the following?
a. Shoes and laces b. Tennis balls and tennis rackets c. Turkey and chicken d. Knives and forks e. DVD players and DVDs
When beneficial externalities are present in a market, the actual output will be
A. greater than the optimal output. B. smaller than the optimal output. C. equal to the optimal output. D. either smaller or greater than the optimal output.