The additional cost to a firm of producing one more unit of a good or service is the
A) minimum cost.
B) total cost.
C) opportunity cost.
D) marginal cost.
Answer: D
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The long-run equilibrium of monopolistic competition is characterized by
A) P = MC = ATC. B) P = MC > ATC. C) P = MR = MC. D) P = ATC > MC.
If a minimum wage law is passed imposing a price floor above the equilibrium price of unskilled labor and employers increasingly used efficiency wages, it would ___ unemployment and ____ the natural rate of unemployment: a. Increase; increase
b. Increase; not change. c. Not change, increase. d. Do none of the above.
If the demand for a good is highly inelastic, a tax on the good
a. places the burden of the tax equally on buyers and sellers b. permits sellers to pass most of the cost increase resulting from the tax on to the consumers of the product c. reduces the profits earned by sellers since they must write the check to pay the tax d. makes the demand more inelastic e. makes the demand more elastic
Corrective taxes are unlike most other taxes because they
a. distort incentives. b. move the allocation of resources away from the social optimum. c. raise revenue for the government. d. move the allocation of resources closer to the social optimum.