As a result of a fire, a small business owner loses some of her computers and other equipment. If the property of diminishing returns applies to all factors of production, she should expect to see
a. an increase in the marginal productivity of her remaining capital and an increase in the marginal productivity of her labor.
b. an increase in the marginal productivity of her remaining capital and a decrease in the marginal productivity of her labor.
c. a decrease in the marginal productivity of her remaining capital and an increase in the marginal productivity of her labor.
d. a decrease in the marginal productivity of her remaining capital and a decrease in the marginal productivity of her labor.
b
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Investment is defined as
A) the purchase of a stock or bond. B) the purchase of new capital goods by firms. C) spending on capital goods by governments. D) what consumers do with their savings. E) financial capital.
Refer to the figure above. If a per-unit tax of $1.50 is imposed on the sale of Good X, what is the size of the deadweight loss due to taxation?
A) $5 million B) $7.5 million C) $1.5 million D) $2 million
Limits on the flow of foreign exchange and financial investment across countries are called
A) currency restrictions. B) credit constraints. C) fixed exchange rates. D) capital controls.
Traffic lights would be considered:
A. a common resource. B. a private good. C. a public good. D. an artificially scarce good.