What does the term "increasing marginal opportunity cost" mean? How are increasing marginal opportunity costs represented on a bowed out production possibilities frontier?
What will be an ideal response?
Increasing marginal opportunity costs means that as more and more of a product is made, the opportunity cost of making each additional unit rises. They are represented by moving down a bowed out production possibilities frontier.
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In the U.S., everyone has to pay social security taxes on labor income until pre-tax income reaches a certain amount after which no additional taxes are due. Consider the case of workers A, B and C who have 60 hours of leisure per week and who earn an hourly wage of $40. Suppose the social security tax is 50% up to a pre-tax weekly income of $1,200 and then falls to zero for any income above $1,200 per week. Assume tastes are homothetic. a. Worker A is observed to work 40 hours per week under this tax system. Is he working more or less than he would if the system were abolished?
b. Worker B is observed to work 30 hours a week under this tax system. Is he working more or less than he would if the system were abolished? c.Worker C is observed to work 20 hours per week under this system. Is he working more or less than he would if the system were abolished? d. Could any of the three workers above share exactly the same tastes? e. For which of these workers is there no deadweight loss from the tax? What will be an ideal response?
Along a society's production possibilities frontier,
a. the level of technology is changing b. more of one good can be produced without giving up some of the other good c. resources are not being fully utilized d. available resources are being used efficiently e. there is productive inefficiency in the economy
Economists object to monopoly because
A. monopoly profits go to the rich. B. monopolies overproduce to maximize profits. C. monopolies are usually polluters. D. monopolists keep output below efficient levels.
A person will do more good pursuing his own self-interest than if he consciously set out to promote the public good was the view of
A. Karl Marx. B. John Maynard Keynes. C. Mikhail Gorbachev. D. Adam Smith.