Government payments made to domestic firms in order to encourage exports are called
A. bribes.
B. tariffs.
C. subsidies.
D. quotas.
Answer: C
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China's high net exports must be balanced by:
A. low net capital outflows. B. high net capital outflows. C. lownet imports. D. high net capital inflows.
A fundamental reason that governments provide public goods is that
A) those goods are subject to the free-rider problem. B) negative externalities are part of the production process of those goods. C) public goods are merit goods. D) those goods are perfectly divisible.
If firms in a competitive market are NOT identical, then the long-run market supply curve will be
A) horizontal. B) upward sloping. C) downward sloping. D) undetermined.
Jon runs a bar in New York City. A city law prevents smoking in New York bars, but Jon is able to convince a friend in city hall to grant his bar a smoking permit by exploiting some fancy loopholes in the law
While smoking enables Jon to charge a premium to the customers (higher drink prices), his workers are subject to second-hand smoke. Therefore Jon has to pay his workers a wage higher than he otherwise would. Assuming Jon's production function is f(L,K) = L?K1-?, where L is the quantity of workers and K is the quantity of capital, how does Jon's optimal capital-to-labor ratio compare to similar bars without smoking?