From Equation (7.1 ) in the book, the short-run marginal cost of production is MC = w/MPL. Based on this equation, which of the following statements is NOT true?
A) If the marginal product of labor is constant, then MC is constant.
B) If the marginal product of labor is a concave curve, then the MC curve is also concave.
C) If the marginal product of labor is a concave curve, then the MC curve is U-shaped.
D) MC increases as the marginal product of labor declines.
B
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Complete the following table assuming that (a) MPS = 1/5, (b) there is no government and all saving is personal saving.
Dr. Rand earns $420,000 per year. He is charged a 20% tax on the first $100,000 he earns. He is charged a 30% tax for any income he earns between $100,000 and $250,000, and he is charged a 38% tax on anything he earns over $250,000. How do we find his marginal tax rate?
a. Add 20% of $100,000, 30% of $150,000, and 38% of $170,000, and then divide the total by $420,000. b. Look at the percentage rate he would pay on his last dollar of income, which is 38%. c. Look at the percentage rate he would pay on $1, which is 20%. d. Add 20%, 30%, and 38%, divide by three, and multiply that amount times $420,000.