A firm with market power faces the following estimated demand and average variable cost functions:Qd = 39,000 - 500P + 0.4M - 8,000PRAVC = 30 - 0.005Q + 0.0000005Q2where Qd is quantity demanded, P is price, M is income, and PR is the price of a related good. The firm expects income to be $40,000 and PR to be $2. Total fixed cost is $100,000. What is the profit-maximizing choice of output?
A. 10,000 units
B. 12,000 units
C. 0 units, the firm shuts down
D. 16,000 units
E. 8,000 units
Answer: E
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A minimum wage law prohibits employers from paying workers less than a specified hourly wage. If the minimum wage is above the equilibrium wage:
A. there will be an excess demand for labor. B. there will be an excess supply of labor. C. employment levels will not fall. D. it creates a price ceiling.
If a French company sells 1000 gallons of Perrier to a U.S. company at 5 euros per gallon, and uses the money to buy stock in a Spanish cork company, how does this affect the French balance of payments accounts?
A) Decrease in financial account; increase in merchandise trade B) Decrease in merchandise trade; increase in financial account C) Decrease in net investment income from abroad; increase in financial account D) Decrease in merchandise trade; increase in net income from abroad
Which of the following would be represented as a debit in the U.S. balance of payments?
a. U.S. purchase of cars from Italy b. U.S. sale of beef to Israel c. U.S. government receives transfers from foreign governments to support U.S. expenses incurred in Europe d. U.S. residents receive gifts of money from friends abroad e. income received by U.S. resident from overseas investment
A regressive tax
a. taxes individuals with higher incomes at a higher rate than individuals with lower incomes. b. takes a similar percentage of income at all income levels. c. takes a higher percentage of the income of those with lower incomes than for those with higher incomes. d. taxes savings at a higher rate than consumption.