Under which of the following circumstances should a firm hire more labor and less capital?
a. The last unit of labor employed generated more output / total product than the last unit of capital employed.
b. The last dollar spent on labor generated more output / total product than the last dollar spent on capital.
c. Labor is relatively much cheaper than capital.
d. None of the above represents a condition where a firm should employ more labor and less capital.
Answer: b. The last dollar spent on labor generated more output / total product than the last dollar spent on capital.
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The consumer-side deadweight loss from a per-unit tax in the goods market arises from solely from the fact that output falls under the tax.
Answer the following statement true (T) or false (F)
Consider two people, Sandy Roos, who earns $25,000 . and Gary Behrman, who earns $50,000 . If the government has decided to tax everyone's first $25,000 at 20 percent and everyone's second $25,000 at 40 percent, then Gary pays
a. $10,000 in taxes and Sandy pays $5,000 in taxes b. $10,000 in taxes and Sandy pays $10,000 in taxes c. $15,000 in taxes and Sandy pays $5,000 in taxes d. $15,000 in taxes and Sandy pays $10,000 in taxes e. $17,000 in taxes and Sandy pays $5,000 in taxes
A firm's production function represents a certain level of technology
a. True b. False Indicate whether the statement is true or false
The figure above portrays a total revenue curve for a perfectly competitive firm. The firm's marginal revenue from selling a unit of output
A) equals $0.50. B) equals $1.00. C) equals $2.00. D) cannot be determined.