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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Which of the following factors will NOT cause a shift in the demand for a good?
A) A change in consumer incomes B) A change in the market price of the good C) A change in the number of consumers D) A change in tastes and preferences
The Bank of Pitland, which is the highest financial institution in Pitland, has bought treasury bonds worth $2.2 billion from a private bank. How will this transaction affect the balance sheets of the private bank and the Bank of Pitland?
What will be an ideal response?
According to the case for analysis (Demand and Supply in the Copper Industry) in the text, all of the following can lead to a decline in the price of copper except:
A) steady production uninterrupted by labor strikes or natural disasters. B) substitution away from copper to other materials such as aluminum and plastic. C) an increase in mining of higher grade materials. D) a surge in demand from foreign importers.
Suppose Okun's law holds and a one percentage point increase in the unemployment rate reduces real output by 2% of full-employment output
The expectations-augmented Phillips curve is given by ? = ?e - 2.5 (u - 0.04). Suppose ? = 0.08 and ?e = 0.03. (a) What is the natural rate of unemployment? (b) What is the actual rate of unemployment? (c) How much is actual GDP compared with full-employment GDP?