ECON 201 final exam
Arthur Weasley invests money in a savings account. the interest rate is 8%. if the interest rate stays at 8%, and if Arthur never makes a withdrawal, about how long will it take for him to double his money?
"Rule of 72" -- 9 years
Ms. Jones will be paid $1000, five years from now. the interest rate at which she discounts the future is 10%. what is the present discounted value of the payment?
$1000 / (1.1.)^5
for ABC Company, the total fixed cost is $100. when the quantity is 20, what is the average fixed cost?
$5/unit
for XYZ Company, the cost of producing 1 unit is $5. the cost of producing 2 units is $12. the cost of producing 3 units is $20. what is the marginal cost of the third unit (i.e., the cost of going from Q=2 to Q=3)?
$8
Gargauntuan Corp. is a monopolist. at a price of $5, the firm can sell 5 units. in order to sell a sixth unit, the firm has to decrease the price to $4. what is the marginal revenue of the sixth unit?
-$1
the price of a cotton handkerchief increases from $1.80 to $2.20. as a result, the quantity demanded decreases from 1100 per day to 900 per day. what is the own-price elasticity of demand?
1.0
the price of good X increases by 5%. as a result, the quantity demanded decreases by 10%. what is the own-price elasticity of demand?
2.0
Huge Corporation is a monopolist. its marginal costs decrease (i.e., its entire marginal-cost curve shifts downward). how will the firm change its price and quantity as a result?
Huge will reduce price and increase quantity of output
Malfoy Corporation is a monopolist. its marginal costs decrease (i.e., its entire marginal-cost curve shifts downward). how will the firm change its price and quantity as a result?
Malfoy will reduce price and increase quantity of output
in Miftez, there is no international trade, and the price of good R is $10 per kilogram. in the rest of the world, the price of good R is $20 per kilogram. this suggests that
Miftez would benefit by exporting good R to other countries
which of the following firms was/were broken up as a result of an antitrust action?
Standard Oil
in one day, Abner can fix 6 bicycles, or he can sharpen 6 axes. in one day, Zebediah can fix 12 bicycles, or he can sharpen 8 axes. between these endpoints, each person has a straight-line production possibilities frontier. which of the following statements is true?
Zebediah has absolute advantage in both activities
which of the following is a graph of the relationship between the cumulative proportion of the population and the cumulative proportion of income?
a Lorenz curve
which of the following statements is true regarding a cartel?
a cartel is a group of oligopolistic firms that collude, in order to increase profits
what will have happened if the Gini coefficient were to become smaller?
a decrease in inequality
in a monopolized labor market, workers will earn ______ than they would have earned if the labor market had been competitive
a lower wage rate
if the social marginal cost of production of good Z is greater than the private marginal cost, we would say that good Z is characterized by
a negative externality
what kind of curve would a straight vertical line be?
a perfectly inelastic demand curve
there is an increase in the equilibrium price of gasoline, and an increase in the equilibrium quantity of gasoline. which of the following would be consistent with these changes?
a rightward shift in the demand curve for gasoline
tariffs, quotas, and VERs are all used to restrict imports. which of the following statements is true regarding these policies that interfere with international trade?
a tariff is a price mechanism, whereas a quota or a VER is an explicit restriction on the quantity of imports
which of the following is graphed as a horizontal line?
a total-fixed-cost curve
the deadweight loss from monopoly is represented graphically by the area of ____, and the excess burden of a tax is represented graphically by the area of _____.
a triangle, a triangle
the Law of Supply states that
when the price increases, there will be an increase in the quantity supplied
Alan's opportunity cost of producing good A is lower than Bob's opportunity cost of producing good A. Bob's opportunity cost of producing good B is lower than Alan's opportunity cost of producing good B. this means that
a. Alan has comparative advantage in the production of good A b. Alan should specialize in the production of good A (a) and (b) only
which of the following would be expected to shift the supply curve for tomatoes to the left?
a. an increase in the prices of inputs used in production of tomatoes c. flooding in tomato-growing regions, which leads to crop damage (a) and (c) only
which of the following is a reason why we might prefer Pigouvian remedies (such as emissions charges) to regulations, as a method of reducing pollution?
a. Pigouvian remedies take into account the differences among firms in the costs of pollution reduction c. Pigouvian remedies raise revenue for the government, which can be used to reduce the reliance on other, more distortionary taxes (a) and (c) only
which of the following companies was broken up as a result of an antitrust action?
a. Standard Oil b. American Tobacco c. ALCOA d. AT&T ALL OF THE ABOVE
in which of the following antitrust cases was a firm broken into more than one smaller firm?
a. Standard Oil b. American Tobacco c. ALCOA ALL OF THE ABOVE
which of the following would be expected to shift the supply curve for tomatoes to the right?
a. a decrease in the prices of inputs used in the production of tomatoes c. discovery of a new technology that makes it possible to produce more tomatoes without using more inputs (a) and (c) only
a demand curve is
a. a graph of the relationship between quantity demanded and price, holding constant all other possible influences on buyers b. downward sloping as we move from left to right, if it obeys the Law of Demand c. a graph of the information contained in a demand schedule ALL OF THE ABOVE
if the equilibrium interest rate is 10% and a usury ceiling is enforced at 5%,
a. a shortage of credit will occur c. the quantity of credit demanded will be larger than it would have been at the equilibrium (a) and (c)
which of the following could lead to higher prices for the consumers in the importing country?
a. a tariff b. an import quota (that is enforced at a level below the equilibrium quantity) c. a voluntary export restraint (that is enforced at a level below the equilibrium quantity) ALL OF THE ABOVE
which of the following statements is/are true regarding adverse selection?
a. adverse selection is one of the reasons why private health-insurance markets do not work very well b. adverse selection arises from the fact that sick people are more likely than healthy people to desire health insurance (a) and (b) only are correct
which of the following is restricted by the antitrust laws?
a. attempting to monopolize b. price fixing c. interlocking directorates d. tie-in sales ALL OF THE ABOVE
when the price of champagne goes up, the demand curve for zabaglione shifts to the right. this means that
a. champagne and zabaglione are substitutes c. the cross-price elasticity of demand for zabaglione with respect to the price of champagne is positive (a) and (c) are both correct
which of the following is/are a reason why the earnings of college-educated workers tend to be higher than the earnings of workers with less than a college education?
a. college-educated workers have higher marginal revenue product, so that the demand curve for their services is farther to the right than it would otherwise be b. a college education is costly to acquire, so that the supply curve of college-educated workers is farther to the left than it would otherwise be (a) and (b) only
Elizabeth's labor-supply elasticity is positive. that means that
a. her labor-supply curve is a vertical line b. her substitution effect is larger than her income effect only (b) and (c) are correct
if a Pigouvian tax is designed in the socially optimal way, it will
a. lead to equality between social marginal costs and private marginal costs b. solve the problem caused by an externality (a) and (b) only
which of the following is/are a correct characterization of a firm that is maximizing profit?
a. marginal revenue is equal to marginal cost b. the slope of the total-cost curve is the same as the slope of the total-revenue curve (A) AND (B) ONLY
which of the following is a feature of the Affordable Care Act?
a. medicaid expansion b. allowing children to stay on their parents' insurance until age 26 c. taxes, subsidies, and an individual mandate, designed to increase participation in the private insurance market ALL OF THE ABOVE
which of the following is true regarding nonrival consumption?
a. nonrival consumption is one of the characteristics of a public good b. nonrival consumption means that one person can enjoy the good without diminishing anyone else's enjoyment of the good c. nonrival consumption is the reason why we had individual willingness-to-pay curves vertically, in constructing the social willingness-to-pay curve ALL OF THE ABOVE
which of the following is a characteristic of a pure public good?
a. nonrival consumption, i.e., many people can enjoy the good at the same time b. nonexcludability, i.e., it is difficult or impossible to exclude those who don't pay (a) and (b) only
which of the following is/are a characteristic of a perfectly competitive industry, but not a characteristic of any other kind of industry? (that is, we are looking for characteristics that do not apply to either a monopoly or an oligopoly or a monopolistically competitive industry.)
a. price is equal to marginal cost at the profit-maximizing quantity b. firms take the market price as given (a) and (b) only
which of the following would push the production-possibilities frontier outward?
a. technological improvements b. increases in the size of the labor force c. capital investments ALL OF THE ABOVE
marginal cost is
a. the additional cost the firm must incur to produce one additional unit b. the slope of the total-cost curve c. the slope of the total variable cost curve (ALL OF THE ABOVE)
a point that is below and to the left of the production-possibilities frontier is
associated with inefficient use of the available resources
consumer surplus is
a. the difference between the amount consumers are willing to pay and the amount they actually have to pay b. graphically represented by the area under the demand curve but above the price line c. used in calculating the deadweight loss in monopoly ALL OF THE ABOVE
which of the following policy issues could be studied with the tools of microeconomics?
a. the effects of tariffs on the price of belts b. the effects of the payroll tax on the net-of-tax wages received by workers c. the effects of rent controls on the quantity of apartments d. the effects of unions on the wages of non-union workers ALL OF THE ABOVE
which of the following is/are necessary for a firm to increase its profits by engaging in price discrimination?
a. the firm cannot be perfectly competitive b. it must be difficult or impossible for customers to re-sell to other customers c. the firm must have some way to tell which of its customers have more elastic demand, and which have less elastic demand ALL OF THE ABOVE
a perfectly competitive firm is a price taker, i.e., the firm takes the market price as given. which of the following characteristics is/are necessary for a firm to be a price taker?
a. the firm must be small relative to the market b. the firm's output must be homogeneous or undifferentiated (A) AND (B) ONLY
which of the following will occur as a result of a tariff?
a. the gross price paid by buyers in the importing country will increase b. the net price received by sellers in the exporting country will decrease c. the quantity of imports will be reduced ALL OF THE ABOVE
assume that the demand for low-skill labor is inelastic. the minimum-wage law succeeds in pushing the wage rate above its equilibrium level for a group of low-skill workers. as a result, what will occur?
a. the number of these workers who are hired will decrease c. the total payments to the affected group of workers will increase (a) and (c)
the payroll tax is a flat rate of labor earnings, but only up to a ceiling, above which the rate drops substantially. also, the payroll tax does not apply to capital income. as a result, the payroll tax is
about proportional over much of the income range, but regressive at high incomes
as quantity increases, average fixed cost
always decreases
which of the following would be expected to lead to a decrease in the supply of sweaters (i.e., a leftward shift in the supply curve for sweaters?
an increase in the prices of inputs used in the production of sweaters
the income elasticity of demand for good Z is negative. this indicates that good Z is
an inferior good
for Smith Company, marginal cost is greater than average variable cost. this means that
average variable cost is increasing
investment projects tend to have a large portion of their costs early in the life of the project, with the revenues coming later. therefore, we are more likely to approve a project if
b. the interest rate is lower c. the project can be completed quickly (b) and (c)
investment projects tend to have a large portion of their costs early in the life of the project, with the revenues coming later. because of this, and because of the need to discount future costs and revenues, we would be more likely to approve a project if
b. the interest rate is lower c. the project can be completed quickly, so the revenues can begin to be realized (b) and (c)
which of the following characteristics does an import quota have in common with a voluntary export restraint?
both are direct restrictions on the quantity of internationally traded goods (whereas a tariff is a price mechanism)
in the Duchy of Gutereise, the economy is on its production-possibilities frontier in 2011. then, by one year later (in 2012), the economy produces more of every good than it had produced in 2011. how could this occur?
by adopting new technologies and increasing the size of the labor force
when the price of champagne goes up, the demand curve for zabaglione shifts to the left. this means that
champagne and zabaglione are complements
the evidence suggests that the elasticity of men's labor supply with respect to the net wage rate is _____, while the elasticity of women's labor supply with respect to the net wage rate is _____
close to zero, positive
the union spillover effect will tend to _______ the wages of non-union workers, and the union threat will tend to _______ the wages of non-union workers
decrease, increase
in the last few decades, the proportion of the Michigan economy that is devoted to state and local taxes has
decreased substantially
over the last several decades, in the U.S. and Michigan, the proportion of the economy originating in manufacturing has
decreased substantially
in an attempt to raise its revenues, Emily's Bar & Grill increases the price of its onion soup. what does this imply about Emily's beliefs regarding the elasticity of demand for its onion soup?
demand is inelastic
the price of good Y increases by 8%. as a result, the quantity demanded decreases by 2%. what would we say about the own-price elasticity of demand for good Y over this region?
demand is inelastic, but not perfectly
assume that labor demand is inelastic. a minimum wage is enforced above the equilibrium wage. what will happen to the total earnings of the affected workers?
earnings will increase
when a monopoly is producing at its profit-maximizing quantity, it is in the ______ region of the demand curve
elastic
because of an improvement in agricultural technology, there is an increase in the supply of peaches. in other words, there is a rightward shift in the supply curve for peaches. what will happen to the equilibrium price and quantity of peaches?
equilibrium price will fall, equilibrium quantity will rise
because of good growing conditions, there is an increase in the supply of asparagus. what will happen to the equilibrium price and quantity of asparagus?
equilibrium price will fall; equilibrium quantity will rise
the demand for pedicures increases (i.e., the demand curve for pedicures shifts to the right). as a result, what will happen to the equilibrium price and quantity of pedicures?
equilibrium price will increase, equilibrium quantity will increase
the supply curve for tarfsnods is perfectly inelastic. the demand curve shifts to the right. what will happen as a result?
equilibrium price will rise; equilibrium quantity will stay the same
which of the following is an example of a condition for an optimal decision by some kind of economic agent?
for the consumer: marginal utility is equal to price
the price of good A increases. as a result, there is a decrease in the demand for good B. this means that
good A and good B are complements
all else equal, an increase in the demand for highly skilled labor will lead to _______ in the distribution of labor-market earnings, and an increase in the supply of highly skilled labor will lead to __________ in the distribution of labor-market earnings
greater inequality, less inequality
all else equal, an increase in the demand for highly skilled labor will lead to _______ in the distribution of labor-market earnings, and an increase in the supply of highly skilled labor will lead to __________ in the distribution of labor-market earnings.
greater inequality, less inequality
inequality between countries is
greater than the inequality within countries (that is, the Gini index for the world as a whole is larger than the Gini indexes for individual countries)
the income elasticity of demand for hand sanitizer is 1.0. what does this imply?
hand sanitizer is a normal good
if a tax is progressive,
higher-income people pay a higher percentage of their incomes in tax
which of the following types of merger presents the greatest danger of reduced competition?
horizontal merger
perfect competition and monopolistic competition are similar in some ways, and different in other ways. which of these is a way in which perfect competition and monopolistic competition are similar?
in each of these market structures, the tendency will be toward zero economic profit
an increase in the DEMAND for highly skilled labor will _____ earnings inequality, and an increase in the SUPPLY of highly skilled labor will _____ earnings inequality
increase, decrease
since the 1970s, the distribution of income in the U.S. has become more unequal. as a result, the Gini Index has
increased
which of the following is believed to be the most important force leading to the recent trend in income inequality in the United States?
increases in the demand for skilled workers
the payroll tax in the U.S. is a flat-rate tax on earnings in the labor market, up to a ceiling. most americans receive most of their income from labor-market earnings, and the ceiling is much higher than the average wage earner makes in a year. thus the payroll tax is approximately proportional over most of the income range. however, above a certain amount (which was $106,800 in 2011), the marginal rate of payroll tax decreases dramatically. a a result, what can we say about the payroll tax for those who earn more than the ceiling?
it is regressive
if an individual receives non-labor income, he/she will work less. this means that
leisure is a normal good
for a perfectly competitive firm, marginal revenue is equal to average revenue. for a monopoly, marginal revenue is ________ average revenue
less than
economic profit is _______ accounting profit, and economic cost is ________ accounting cost
less than, greater than
if there is a positive externality, a competitive private market will produce _____ the socially optimal quantity. if there is a negative externality, a competitive private market will produce _______ the socially optimal quantity
less than, more than
the distribution of annual income is _____ the distribution of wealth
less unequal than
for a perfectly competitive firm that is producing a quantity greater than zero, the firm's supply curve is its
marginal cost curve
the benefit to the firm from hiring an extra unit of an input is called the marginal revenue product. marginal revenue product is equal to
marginal product multiplied by marginal revenue
for any firm for which price is greater than average variable cost, the profit-maximizing quantity of output will be the precise quantity at which
marginal revenue equals marginal cost
for any firm (regardless of market structure), if the price is greater than average variable cost, the profit-maximizing quantity of output will be quantity at which
marginal revenue is equal to marginal cost
the distribution of income in the U.S. is _____ the distributions of income in other rich countries
more unequal than
if the net wage rate DECREASES, the income effect would move the individual toward _____ work, and the substitution effect would move the individual toward _____ work
more, less
the firms in a monopolistically competitive industry are earning positive economic profits. what would we expect to happen as a result?
new firms will enter the industry until zero economic profits are being earned
the income elasticity of demand for commodity J is 0.6. on the basis of this information, we would say that J is
normal
in alphabetical order, the four market structures are monopolistic competition, monopoly, oligopoly, and perfect competition. rank them in order of the degree of market power, from the market structure with the least degree of market power to the market structure with the greatest degree of market power
perfect competition, monopolistic competition, oligopoly, monopoly
for the exact same flight, American Airlines charges lower prices for passengers who stay over a Saturday night, and higher prices for passengers who do not stay over a Saturday night. this is an example of
price discrimination
which of the following is restricted by the antitrust laws?
price fixing
profit per unit of output is
price minus average total cost
the elasticity of demand for thingamabobs is 1.0. the quantity demanded goes up from 30 per day to 50 per day. assume that a change in price was the only reason for the change in quantity demanded. what must have happened to the price, in order to have caused quantity demanded to change in this way?
price went down by 50%
the market supply curve for beef jerky shifts to the right. At the same time, the market demand curve for beef jerky shifts to the left. as a result of these two changes, what will happen to the equilibrium price and quantity of beef jerky?
price will fall; the effect on quantity can't be determined without more information
which of the following groups is helped by a tariff?
producers in the importing country
which of the following is a characteristic of monopolistic competition, but NOT a characteristic of perfect competition?
product differentiation
the federal individual income tax has exemptions and graduated rates. as a result, this tax is
progressive
assume that the elasticity of demand for green and white ball-point pens is 1.2. due to a rightward shift in the supply curve for pompons, the price decreases by 50%. what will happen to the quantity of pompoms demanded?
quantity demanded will increase by 60%
the elasticity of demand for volleyballs is 0.5. the price of a volleyball decreases by 10%. what will happen to the quantity demanded?
quantity demanded will rise by 5%
in Lumporania, everyone pays exactly $1000 in tax, regardless of his or her income. this tax is
regressive
in the Empire of Lumpiness, every person pays $1000 per year of tax, regardless of his or her income. this tax system is
regressive
the supply curve for beef shifts to the right. assuming that the demand for beef is inelastic, what will happen to the total revenue received by cattle ranchers?
revenue will decrease
the Gini coefficient for annual income is ______ than the Gini coefficient for wealth, and the Gini coefficient for annual income is ______ the Gini coefficient for lifetime income
smaller than, larger than
the Lorenz Curve in country A is closer to the horizontal axis than the Lorenz Curve for country B. in other words, the Lorenz Curve for country A is always below the Lorenz Curve for country B. this means that
the Gini Ratio for country A is greater than the Gini Ratio for country B
which of the following is a normative statement?
the U.S. should increase the degree of progressivity of its tax system
decrease in consumer surplus is represented graphically by
the area of a trapezoid
an import quota is instituted. as a result, consumers in the importing country are harmed, because they consume a smaller quantity, and they pay a higher price for the units they do consume. what is our best measure of the dollar value of the harm done to consumers by the income quota?
the change in consumer surplus
consumer surplus is
the difference between the amount consumers are willing to pay and the amount they actually have to pay
we measure the deadweight loss of monopoly as
the difference between the consumers' loss from monopoly and the producers' gain from monopoly
which of the following policy issues would be classified as having to do with macroeconomics, rather than microeconomics?
the effect of the Federal Reserve's monetary policy on the rate of inflation
as we move downward and to the right along a straight-line demand curve, what happens to the own-price elasticity of demand?
the elasticity decreases
there is an increase in the demand for billiard balls (i.e., the demand curve for billiard balls shifts to the right). as a result,
the equilibrium price will increase; the equilibrium quantity will increase
which of the following is widely considered to be a violation of horizontal equity?
the federal individual income tax is not neutral with respect to marital status, i.e., single persons sometimes experience a marriage penalty or marriage bonus
which of the following is necessary for a firm to increase its profits by engaging in price discrimination?
the firm must have some way of distinguishing among its customers, to tell which ones have demand that is more elastic and which ones have demand that is less elastic
Hezekiah Company is a perfectly competitive firm. at its current level of output, price is greater than marginal cost. this means that
the firm should increase output
if a natural monopoly were to charge a price equal to marginal cost,
the firm would suffer economic losses
assume that the United States enforces an import quota on imported cummerbunds. which of the following groups would gain from the import quota?
the holders of the license to import cummerbunds
in your textbook, the Prisoners' Dilemma is used to study
the interaction between firms in a duopoly
the equilibrium price of karakasevs is $10. the government enforces a price ceiling in the market for karakasevs, at a price of $20. what will happen as a result of the price-ceiling law?
the law will have no effect
the marginal revenue product of labor is
the marginal product of labor, multiplied by the firm's marginal revenue
the income tax in Koblenzia has an exemption, such that those with low incomes pay no tax. it also has graduated marginal rates. for a taxpayer whose income is greater than the exemption level,
the marginal tax rate is greater than the average tax rate
the short-run supply curve for a perfectly competitive firm is
the marginal-cost curve for prices equal to or greater than average variable cost. if price is less than average variable cost, the quantity supplied is zero
for a business firm that takes the wage rate as given, the demand curve for labor is given by
the marginal-revenue-product curve
assume that the individual consumer takes the market price as given. then, the individual demand curve is
the marginal-utility curve
which of the following is/are consistent with the Law of Demand?
the price of A goes up. as a result, the quantity demanded of A goes down
Hezekiah is considering taking out a loan to make a new capital investment. the cost is $100. exactly one year later, the project will generate revenue of $105, and the project will then self-destruct. the interest rate is 10%. which of the following is true?
the project has negative net PDV; Hezekiah should not do it
a price ceiling is imposed in the market for licorice. the price ceiling is below the equilibrium price, and this leads to shortages. we say that a shortage is larger if the difference between quantity demanded and quantity supplied is larger. all else equal, which of the following statements is/are true, regarding the relationship between the size of the shortage and the own-price elasticity of demand?
the shortage will be larger if the elasticity is larger
which of these is the best definition of economics?
the study of how a society chooses to use its scarce resources to produce, consume, and exchange goods and services
job A and job B are identical in every way except one. the only difference between the two jobs is that the working conditions of job A are pleasant, whereas the working conditions of job B are unpleasant. as a result, the equilibrium wage rate for job B will be higher than the equilibrium wage rate for job A. why does the wage difference occur?
the supply curve for A labor is to the right of the supply curve for B labor
two markets have exactly the same net-of-tax supply curve. they also have exactly the same equilibrium price and quantity when there is no tax. then each of the markets is subjected to exactly the same tax. the only difference between the two markets is that the demand for good X is more elastic than the demand for good Y. on the basis of this information, what can we say?
the tax in market Y will generate more revenue
which of the following statements is associated with normative analysis, rather than positive analysis?
the tax system should be regressive
the opportunity cost of action A is
the value of what must be given up, in order to pursue A
different people have different wage rates, for a variety of reasons. one type of wage-rate differential is a compensating wage-rate differential. why we we observe compensating wage differentials for some occupations?
the work in those occupations is dangerous or unpleasant
why do we observe compensating wage-rate differentials for certain occupations?
the workers perform tasks that are dangerous and/or unpleasant
both perfect competition and monopolistic competition have a tendency toward zero economic profit. what characteristic of these industries causes them to move toward zero economic profit?
there is free entry and exit
in the last quarter of the 20th century, there was a large increase in the demand for highly skilled labor (i.e., the demand curve for highly skilled labor shifted to the right). what happened as a result?
there was an increase in the gap between the wages of highly skilled workers and the wages of less skilled workers
what will be the effect of a price ceiling that is enforced above the equilibrium price?
there will be no effect
the owners of Samantha's Bar and Grill would like to increase the total revenues from their sales of fried pickles. they decide to decrease the price. what does this imply about their beliefs, regarding the elasticity of demand?
they believe demand is elastic
the demand for milk is inelastic. if the price of milk were to increase, what would happen to the total revenue received by sellers of milk?
total revenue would increase
which of the following statements is/are true, regarding the effect on labor supply, caused by an increase in the wage rate?
when the wage rate increases, the opportunity cost of leisure increases
which of the following would be an example of the "Tragedy of the Commons"?
when there is free access to a fishing ground, the stock of fish will be depleted
assume that the elasticity of labor supply is smaller than the elasticity of labor demand. a payroll tax is levied on employers. who will bear the largest share of the burden of the tax?
workers
officially, half of the payroll tax is levied on workers, and half of the payroll tax is levied on employers. assume that labor supply is more inelastic than labor demand. a payroll tax is a tax on labor-market earnings. who bears the burden of the payroll tax?
workers bear most of the burden
assume that the elasticity of labor supply is smaller than the elasticity of labor demand. a payroll tax is levied at exactly the same rate on employers and workers. who will bear the economic burden of the tax?
workers will bear most of the burden
Georges Seurat's painting "Sunday Afternoon on the Island of La Grande Jatte - 1884" is not reproducible. thus a graph of the supply curve of this painting would be a vertical line. what is the own-price elasticity of supply?
zero
in the Republic of Fenwickia, every household has exactly the same income. the Gini Ratio for this country is
zero
as a result of free entry into the industry and free exit from the industry, the tendency in a perfectly competitive industry is toward
zero economic profit
