Refer to the figure below. If VMP mkt can be characterized by the equation VMP mkt = 50 - 2H mkt , where H is the number of hours worked, and VMP home can be characterized by the equation VMP home = 45 - 3H home , where H is the number of hours worked, what is H* if there are a total of 40 hours to be worked between work and home?
Setting the two equations equal to each other gives 50 - 2H mkt = 45 - 3H home and, keeping in
mind the total time constraint, that H mkt + H home = 40 yields that H home * = 25 and H mkt * = 15.
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
Governments may prefer an inflation tax to some other type of tax because the inflation tax
a. is easier to impose. b. reduces inflation. c. falls mainly on high-income individuals. d. reduces the real cost of government expenditure.
One advantage of the Herfindahl index over the concentration ratio is that the:
A. Herfindahl index ignores the small firms that always exist on the fringes of any industry. B. concentration ratio excludes the largest firms in an industry. C. Herfindahl index is easier to compute. D. Herfindahl index takes into account all firms in an industry.
Which of the following is one of the Five Fundamental Questions?
A. Which products will be in scarce supply and which in excess supply? B. Who should appoint the head of the central bank? C. How much should society save? D. What goods and services will be produced?