Suppose capital and labor are perfect substitutes in a long-run production process. If labor costs $15 per hour and the rental rate of capital is $20 per hour, what can we say about the profit maximizing choice of labor and capital inputs?
A) We will only use labor in the production process
B) We will only use capital in the production process
C) We will use equal amounts of capital and labor
D) The optimal capital-labor ratio is 0.75-to-1.
A
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When the average tax rate rises as income rises, this is known as progressive taxation.
Answer the following statement true (T) or false (F)
An increase in autonomous investment ________
A) increases equilibrium output at any interest rate B) causes a movement down along the IS curve C) shifts the IS curve to the left D) all of the above E) none of the above
What happens to the total surplus in a market when the government imposes a tax?
a. Total surplus increases by the amount of the tax. b. Total surplus increases but by less than the amount of the tax. c. Total surplus decreases. d. Total surplus is unaffected by the tax.
The California gold rush resulted in
A) an increase in the amount of money in circulation and higher prices throughout the country. B) no change in the amount of money in circulation and higher prices throughout the country. C) an increase in the amount of money in circulation and higher prices only in California. D) no change in the amount of money in circulation and higher prices only in California.