Suppose a firm uses workers and office space to produce output. The firm is locked into a year-long lease on its office space, but it can easily vary the number of employee-hours it uses each day. The table below describes the relationship between the number of employee-hours the firm uses each day and the firm's daily output. Each unit of output sells for $2, the hourly wage rate is $14, and the rent on the office space is $50 per day.Employee-HoursPer DayOutputPer Day0014048091201516023200When the firm uses 9 employee-hours, its total cost each day is:
A. $126
B. $56
C. $176
D. $64
Answer: C
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While Modigliani's LCH is similar to Friedman's PIH in several ways, it does differ in that it
A) assumes individuals base their consumption decisions on a time span greater than one year. B) assumes that individuals prefer to maintain a stable consumption pattern. C) attempted to reconcile the seemingly paradoxical cross-section and time-series empirical data. D) gives an important role to assets as a determinant of consumption behavior.
In the above figure, the optimal level of pollution cleanup is
A) Q1.
B) Q2.
C) Q3.
D) Q4.
Suppose that the Bureau of Labor Statistics predicts that the number of jobs for dental hygienists will grow faster than most occupations while the number of jobs for bookbinders will decline. This change in the labor market could lead to
a. frictional unemployment created by efficiency wages. b. structural unemployment created by efficiency wages. c. frictional unemployment created by sectoral shifts. d. structural unemployment created by sectoral shifts.
Economists are:
A) concerned with developing theories and interested in solving problems. B) interested in solving problems but not concerned with developing theories. C) reluctant to predict changes in variables such as prices, employment, and spending. D) always in agreement on the best way to implement policy decisions.