How does a competitive firm's demand for labor react to a specific tax on each unit of output it sells?
What will be an ideal response?
The price the firm receives for each unit of output is now - t instead of p where is new price paid by consumers. Assuming that does not exceed p by the full amount of the tax, the demand for labor shifts downward and intersects the wage line at a lower quantity of labor.
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
A stock is an IOU and a bond represents ownership in a company
Indicate whether the statement is true or false
All but the most primitive societies use money as a medium of exchange, implying that
A) the use of money is economically efficient. B) barter exchange is economically efficient. C) barter exchange cannot work outside the family. D) inflation is not a concern.
A strategy A is "dominant" for a player X if
A) strategy A contains among its outcomes the highest possible payoff in the game. B) irrespective of any of the possible strategies chosen by the other players, strategy A generates a higher payoff than any other strategy available to player X. C) strategy A is the best response to every strategy of the other player. D) strategy A is the best response to the best strategy of the other player. E) every outcome under strategy A generates positive payoffs.