Refer to the above figure. Economic profits for this firm are
A. negative.
B. zero.
C. positive.
D. undetermined without more information.
Answer: A
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Answer the following statement(s) true (T) or false (F)
1. The Engel curve contains information that is not found in the indifference curve diagram. 2. The Law of demand can only be violated if a good is inferior. 3. All Giffen goods must be inferior goods, but not all inferior goods are Giffen goods. 4. In a two-good world, one good-but not both-can be inferior. 5. An inferior good is one for which the substitution effect is relatively large.
Suppose two goods (X and Y ) are being produced efficiently and that the production of X is always more labor intensive than the production of Y. Production depends only on two factors (capital and labor); these may be smoothly substituted for each other. The total quantities of these inputs are fixed. An increase in the production of X and a decrease in the production of Y will
a. increase the capital-labor ratio in each firm. b. decrease the capital-labor ratio in each firm. c. leave the capital-labor ratio for each firm unchanged. d. increase the capital-labor ratio in Y production and decrease the capital-labor ratio in X production.
Which of the following will not shift the demand curve for movie tickets?
a. a change in the cost of babysitting services b. a change in the price of movie tickets c. a change in the quality of television programs d. a change in the income of movie-goers e. a change in the number of consumers
This year, Abigail earned $15,000 and she paid 15 percent in income and payroll taxes. She qualified for Medicaid and food stamps. For every $100 that she earns, Abigail loses $35 in Medicaid benefits and $15 in food stamps. Abigail faces an effective marginal tax rate of
a. 15 percent. b. 35 percent. c. 50 percent. d. 65 percent.