Suppose the marginal product of labor equals 1/L. If the firm can sell its output for $10 per unit, and the wage is $1 per unit, how many units of labor will the firm hire?
A) 0
B) 1
C) 10
D) 100
C
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Two firms, Industrio and Capitalista, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below. Both firms currently use process A, and each emits 4 tons of smoke per day. The government is considering two plans to reduce pollution: requiring both firms to reduce pollution by 25 percent or auctioning pollution permits. Each permit would entitle the owner to emit one ton of smoke per day. Without a permit, no smoke can be emitted.Process(smoke/day) A(4 tons/day) B(3 tons/day) C(2 tons/day) D(1 ton/day) E(0 tons/day) Cost to Industrio ($/day) $350$400$500$700$1,000 Cost to Capitalista
($/day) $225$250$290$400 $600Suppose the government decides to auction 6 permits. The government conducts the auction by starting at a price of $1 and asking how many permits each firm wants to buy at that price. If the total is more than 6, it raises the price by $1 and asks again until the total quantity demanded falls to 6. Under this system, each permit will sell for ________ with Industrio buying ________ and Capitalista buying ________. A. $41; 4; 2 B. $31; 2; 4 C. $101; 3; 3 D. $51; 4; 2
In the above figure, suppose that the government sets a limit that may be produced of 10 units of output and the price rises to $4. The total deadweight loss would be
A) $0. B) $10. C) $15. D) $20.
Suppose that the price of capital falls. Does this necessarily imply that the demand for laborwill fall? Explain
What will be an ideal response?
Property taxes ______ tax deductible and home equity loans ____ tax deductible (on federal income tax returns).
A. are; are B. are not; are not C. are; are not D. are not; are