Discuss the fixed and variable costs of operating a farm. Which makes up a greater percentage of the total costs?
What will be an ideal response?
The fixed costs of a farm are extensive, including interest, rent, tax, mortgage payments on land, buildings, and equipment. Most labor is also supplied by the farmers themselves, this makes wage a fixed cost as well. Variable costs include the seed, fertilizer, and fuel that goes into producing the crop and the feed and veterinarian bills in producing livestock. The majority of total costs are fixed costs, so it is rare to see a farm shutdown in the short-run. A farmer is more likely to remain producing in the short-run and exit the market in the long run.
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A change in the wage causes a shift in the supply curve for labor and a
A) shift along the demand curve for labor. B) shift in the demand curve for labor. C) rotation in the demand curve for labor. D) It cannot be determined by the information provided.
As exemptions are raised and allowable deductions are increased, there is
A. Greater horizontal equity. B. Greater vertical inequity. C. A smaller gap between effective and nominal tax rates. D. A smaller gap between gross income and taxable income.
The source of the supply of loanable funds
a. is saving and the source of demand for loanable funds is investment. b. is investment and the source of demand for loanable funds is saving. c. and the demand for loanable funds is saving. d. and the demand for loanable funds is investment.
Expansionary fiscal policy is incapable of solving the underlying problem of a negative real shock. Which of the following problems also makes it difficult to use fiscal policy to combat a negative real shock?
A. The problem of timeliness of fiscal policy B. The problem of crowding out of private spending C. All of these problems make it difficult. D. The problem of targeting fiscal policy