Angelee works for a major corporation overseeing quality control, and she earns $50,000 per year. She uses about ten percent of her pay to purchase household items, such as appliances, and spends another two percent on travel. She buys stock with about five percent of her pay. Explain which of her actions are part of the factor market and why?
What will be an ideal response?
When Angelee works and earns wages, it is part of the factor market, because she is selling her labor, which is a factor of production, to a firm, in exchange for wages. When she invests in stocks, she is also in the factor market, because her money is capital that firms can use to produce more goods and services.
You might also like to view...
The long-run effect of an increase in the growth rate of the quantity of money is a
A) higher nominal interest rate. B) lower nominal interest rate. C) lower real interest rate. D) lower inflation rate. E) higher real interest rate.
What would be the direct effect of a reduction in the U.S. selling price of Japanese-made cars on the U.S. demand for Japanese-made cars?
A) No effect, because price changes affect quantity demanded, not demand. B) The demand would decrease. C) The demand would increase. D) We cannot tell unless we know the elasticities of demand for Japanese-made and American-made cars. E) We cannot tell unless we know whether more cars can be imported from Japan.
Which of the following is a determinant of price elasticity of demand?
a. Availability of substitute goods b. Excess capacity c. Scale of production d. Inventories e. Cost of production
Jan has an income of $30,000 and pays $4,500 in taxes. When Jan's income rises to $40,000, her tax bill rises to $6,500. What is Jan's marginal tax rate?
A. 5 percent. B. 15 percent. C. 16.25 percent. D. 20 percent.