Assume fixed costs are 470 and labor costs $20 per unit. The first laborer produces 20 units of output. Subsequent hires add 5 units less to production than the previous worker. Thus the second worker adds 15, the third adds 10 etc. What is the average variable cost of output when one worker is hired?
A. 20
B. 24.50
C. 1
D. None of these is the correct AVC.
Answer: C
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In a persisting demand-pull inflation
A) aggregate demand increases and potential GDP decreases. B) aggregate demand decreases and aggregate supply decreases. C) aggregate supply decreases and aggregate demand increases. D) aggregate supply increases and aggregate demand increases. E) None of the above answers is correct.
For each of the following, how would they be included in the national income accounts?
a. The University of California buys a new computer. b. Charles buys a new MP3 player. c. Marian buys a new mountain cabin. d. Vikki buys an old mansion with hopes of restoring it. e. Farmer Brown buys a used combine harvester.
Total output equals total income
a. only at equilibrium. b. always. c. only at non-equilibrium levels of income. d. never.
Describe the circumstances under which it would be better for the government to sell pollution permits than to levy a corrective tax