The equation of exchange states
MV = PQ
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Suppose Larry's Lariats produces lassos in a factory, and uses nine feet of rope to make each lasso. The rope is put into a machine that automatically cuts it to the right length, then seals the ends to prevent fraying. The rope is then hand tied, dipped, and wound before being placed in a packaging machine to prepare it for retail sale. If Larry were to decrease the production of lassos, which of the following is true regarding the company's costs?
A. The fixed cost of the rope cutting machine would stay the same. B. The variable costs of rope would drop to zero. C. The fixed cost of the employee's wages would stay the same. D. None of these is true.
An example of featherbedding is
A) the union practice that requires younger workers to be laid off first in a recession. B) a requirement that all construction workers working on government-funded construction projects must be paid union wages. C) employer-paid dental insurance negotiated by the union. D) a requirement on railroads to keep a fireman on board after the introduction of diesel engines.
The real seignorage collected by the government in an all-currency economy is the product of
A. the debt-GDP ratio and the real money supply. B. the debt-GDP ratio and the rate of inflation. C. the rate of inflation and the real supply of government bonds. D. the rate of inflation and the real money supply.
The figure above shows the supply curve for soda. The market price is $1.00 per soda. The producer surplus from all the sodas sold is
A) $0.00. B) $15.00. C) $20.00. D) $1.00. E) None of the above answers is correct.