Suppose that the government imposes a tax on firms for money wages they pay. How would this change the classical aggregate supply curve? Why?
What will be an ideal response?
The tax would effectively increase the money wage, requiring the marginal product of labor to rise and the quantity of labor to fall. This would shift the aggregate supply curve to the left.
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Refer to the figure above. What does the region ABDC indicate?
A) Economic profit B) Loss incurred by the producer C) Consumer surplus D) Deadweight loss
Max is shopping for a new winter jacket. The salesperson explains that two coats have identical features-the Columbia jacket that costs $120, and the Burton jacket that costs $300. Max buys the Burton jacket. Burton jackets may be a good example of:
A. a normal good. B. an inferior good. C. a Veblen good. D. a Giffen good.
On average, countries that have a larger degree of economic freedom tend to have
a. higher per capita income levels, but slower rates of economic growth, than countries with less economic freedom. b. lower per capita income levels, but more rapid rates of economic growth, than countries with less economic freedom. c. both higher per capita income levels and more rapid growth rates than countries with less economic freedom. d. both lower income levels and slower growth rates than countries with less economic freedom.
How do countries know when they have a comparative advantage in the production of a good?
A) Government accountants collect cost data from countries and analyze it to find out which country has a comparative advantage in the production of which good. B) They know as the result of individuals trying to earn profits and buying low and selling high in the process. C) The United Nations Economic Conference Group analyzes cost data from countries and determines which country has a comparative advantage in the production of which good. D) There is not one major way that countries acquire this information.