If output Q = 8.5e (e = units of effort) and Wage, W = $6.70 + 0.25Q, then 20 units of effort are worth ________ to the firm.
A. $0.425
B. $35.80
C. $49.20
D. $170.00
Answer: C
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The income effect
A. moves in the opposite direction from the substitution effect for an inferior good. B. is always greater than the substitution effect. C. moves in the same direction as the substitution effect for an inferior good. D. relates to increases in nominal rather than real income.
What is the effect when there is an increase in the European inflation rate relative to the U.S. interest rate?
a. Europeans buy fewer dollars, shifting S1 to S2.
b. U.S. consumers buy more European goods, shifting D1 to D2.
c. Europeans supply euros to buy more dollars, shifting S1 to S2.
d. U.S. consumers demand more euros, shifting S1 to S2.
Which of the following is incorrect?
A. A firm can benefit from strategies that raise the marginal costs of its rivals. B. Predatory pricing is easy to prove in court. C. Learning curve effects may enable an incumbent to produce at a lower cost than a potential entrant. D. A firm can benefit from strategies that raise the fixed costs of all the firms in the industry.
A good that has social costs that exceed private costs has a quantity that is
A) too high. B) too low. C) just right. D) the best society can do.