Tova is trying to get a bakery to hire her. She said that if she helped out, the shop could sell an additional 5 cakes per day. If each cake sells for $10 and the owner hires her, then
a. the wage rate must be at least $51 per day.
b. Tova's marginal revenue product must be less than the wage rate.
c. Tova's marginal revenue product must be positive.
d. the wage rate must be at most $50 per day.
e. the wage rate must be equal to $40 per day.
D
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A payroll tax is a
a. fixed number of dollars that every firm must pay to the government for each worker that the firm hires. b. tax that each firm must pay to the government before the firm can hire workers and operate its business. c. tax on the wages that firms pay their workers. d. tax on all wages above the minimum wage.
If labor is 20 percent of total costs in industry A and 70 percent in industry B, then other things equal, we would expect the elasticity of demand for labor to be
A) greater in industry A than in industry B. B) greater in industry B than in industry A. C) the same in both industries. D) uncertain since no general relationship exists between cost shares and elasticities.