Refer to the figure below. If the supply curve for labor can be written as L = w/2 - 3/2 and the initial wage was $10, how much excess burden is created if there is a tax on wages of $2?
Excess burden is the area of the triangle idh, which is (1/2)(2)(1) = 1.
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How does the demand for high-skilled workers compare to the demand for low-skilled workers? Why does this difference exist?
What will be an ideal response?
Advertising by the monopolist
A. is not done because the monopolist has the only supply of the product and doesn’t need to advertise. B. would have the effect of shifting its demand curve to the left. C. may lead to expanded production by the monopolist. D. makes no sense because there are no substitute commodities available to consumers.
If a country tries to stimulate the economy with fiscal policy, the effects will be exchange rate
a. depreciation, lower interest rates, and a small increase in aggregate demand. b. depreciation, higher interest rates, and a small decrease in aggregate demand. c. appreciation, lower interest rates, and a small increase in aggregate demand. d. appreciation, higher interest rates, and a small increase in aggregate demand.
A price index is:
a) a comparison of the current price of a market basket to a fixed point of reference. b) a comparison of real GDP in one period relative to another. c) the cost of a market basket of goods and services in a base period divided by the cost of the same market basket in another period. d) a ratio of real GDP to nominal GDP.