How much is the tax?
A. $6.00
B. $4.50
C. $3.00
D. $2.00
D. $2.00
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Peter's Pencils is a perfectly competitive company producing pencils. Suppose Peter is producing 1,000 pencils an hour. If the total cost of 1,000 pencils is $500, the market price per pencil is $2, and the marginal cost is $2, then Peter
A) makes an economic profit because marginal revenue is equal to marginal cost at this output level. B) should decrease his output to increase his profit. C) is maximizing his profit and is making an economic profit. D) should increase his output to increase his profit. E) is not maximizing his profit but is making zero economic profit anyway.
When production of a good results in an external cost, the unregulated competitive market equilibrium is inefficient because ________
A) MSC = MC B) MSC = MB C) MSC > MB D) MSC < MB E) MSC is undefined
In 2010 the federal government reduced the Social Security tax withholding rate from 12.4 percent (6.2 percent on both the employer and employee) to 8.4 percent (4.2 percent on both the employer and employee) on the wages of all workers. If the tax were redefined such that the entire 12.4 percent was statutorily levied on employers, economic analysis suggests that the actual burden of the tax
would a. remain unchanged. b. shift more heavily toward employers. c. shift more heavily toward employees. d. be different than if the entire 12.4 percent was statutorily imposed on employees.
Assume the central bank decides to raise the discount rate. Where and how should you begin your analysis when analyzing the chain reaction of economic interactions?
a. Start the analysis in the real goods market with aggregate demand shifting to the left. b. Start the analysis in the real goods market with aggregate demand shifting to the right. c. Start the analysis in the real credit market with demand for real credit shifting to the left. d. Start the analysis in the real credit market with demand for real credit shifting to the right. e. Start the analysis in the real credit market with supply of real credit shifting to the left.