To fully understand the progressivity of government policies, one should only look at the proportion of total income that individuals pay in taxes each year
a. True
b. False
Indicate whether the statement is true or false
False
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In 18th century Europe, governments gave guilds legal authority to limit production of goods. How did this authority either obstruct or improve the market mechanism?
A) It obstructed the market mechanism because with one more party having to coordinate activities (the guilds) there were delays in getting the products to consumers. B) It improved the market mechanism because the government's actions provided the correct set of signals to the market so that producers can adjust their output to better meet the needs of consumers. C) It improved the market mechanism by making it more efficient because the guilds were able to quickly identify and rectify any market shortages and surpluses. D) It obstructed the market mechanism because the guild's actions prevented the forces of demand and supply from coordinating the self-interested decisions of producers and consumers.
If Q represents a firm's level of output, W represents the wage paid to labor (L) and R is the cost of capital (K), then which of the following represents the firm's isocost line?
A. C = FC + VC(Q) B. C = FC(Q) + VC(Q) C. C = WL + RK D. C = (W + R)Q
What are the two basic types of economies?
A firm is currently producing in the elastic portion of its demand curve. What course of action do you recommend for it assuming it wants to raise revenue?
A. Increase price, because if it increases price and demand is elastic, total revenue will increase. B. Reduce price, because if it reduces price and demand is elastic, total revenue will increase. C. Continue producing at the current output level, because it maximizes its total revenue by producing in the elastic portion of its demand curve. D. Continue selling at the same price, but increase the amount it produces.