Tax Wedge
What will be an ideal response?
The difference between what the buyer pays and the seller receives when a tax is placed in a market
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Consider a firm with the following cost information: ATC = $15, AVC = $12, and MC = $14 . If we know that this firm has decided to produce Q = 20 by following the rule to maximize profits or minimize losses, then the price of the output is:
a. $12. b. $14. c. $15. d. $20.
Which of the following people would be considered employed in the Census Bureau's Household Survey?
a. A homemaker working 20 hours cleaning her house b. A person paid to work 2 hours per week cleaning houses c. A child shoveling neighbors' driveways for money d. A person volunteering full-time at a local hospital e. A laid-off carpenter looking for a job
Suppose an agent must pay the full marginal cost for an item but splits the marginal revenue with the principal. As a result,
A) joint profit is maximized. B) joint profit is not maximized. C) the agent will not enter into such a contract. D) the agent wishes to sell as many items as he can.
At the Larson Bakery the marginal products of the first, second, and third sales clerks are 30, 27, and 21 customers served, respectively. The total product (number of customers served) of the first two sales clerks is
A. 6. B. 17. C. 57. D. 78.