The figure above shows the U.S. production function. How would an increase in capital be shown in the figure?
A) an upward shift or rotation of the production function
B) a downward shift or rotation of the production function
C) a movement from point A to point B
D) a movement from point C to point B
E) None of the above because the effects of an increase in capital cannot be shown in the figure.
A
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When the factor market is purely competitive, the firm's average expenditure curve for a factor of production is
A) upward sloping and to the right of the marginal expenditure curve. B) downward sloping and to the right of the marginal expenditure curve. C) identical to the marginal expenditure curve. D) downward sloping and to the left of the marginal expenditure curve.
Which of the following is true of a corrective tax? a. It is also referred to as Pigouvian tax
b. It increases the deadweight loss caused by negative externalities. c. It is inflexible compared with command-and-control regulation. d. It needs to be updated with advances in technology.