Refer to the information provided in Figure 13.7 below to answer the question(s) that follow.  Figure 13.7 Refer to Figure 13.7. If the government regulates Armstrong Cable so they can earn only a normal return, the price would be set at

According to this Application, if you earn a salary of $40,000 in the first year and all prices triple in the next 10 years, what will your nominal annual salary be in 10 years?

A) $20,000 B) $60,000 C) $120,000 D) $180,000

This question has you determine the effect of a tax on labor on the long-run cost function. Consider a firm with the production function f(L,K) = LK. The wage rate and rental rate on capital are w and r, respectively. a

Using the Lagrangian, derive the long-run cost function for this firm. b. Suppose the government taxes labor at by an amount t per unit of labor. Rewrite the long-run cost function including the tax. Hint: the effective wage rate is now w + t. c. Compute the marginal effect of the tax on the long-run cost function. To do so, compute the partial derivative of the cost function with respect to t. Does an increase in the tax increase the cost linearly?