A removal or depletion tax on an open-access resource increases the marginal private cost of using the resource by
a. zero
b. the amount of the tax
c. the marginal product of the resource
d. the average private cost of using the resource
e. the average social cost of using the resource
B
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Assume that a firm spends $500 on two inputs, labor (graphed on the horizontal axis) and capital (graphed on the vertical axis)
If the wage rate is $20 per hour and the rental cost of capital is $25 per hour, the slope of the isocost curve will be A) 500. B) 25/500. C) -4/5. D) 25/20 or 1.25.
Which of the following is most likely a fixed cost?
A. Labor cost. B. Property taxes. C. Energy cost. D. Raw materials cost.
In a simple economy (without government or foreign trade) where output can be purchased only by consumers or by firms, saving must equal
A) depreciation. B) income. C) consumption. D) investment.
Purchasing power parity does NOT provide accurate predictions of exchange rates because
A) almost all goods and services are traded across nations. B) governments currently fix exchange rates. C) firms are unable to set prices differently across nations. D) non-traded goods account for approximately 50 percent of the value of production in an economy.