The Bubby Gum factory produces bubble gum. Joanne is one of the employees, and she produces 10 packs of bubble gum per hour. Joanne's money wage rate is $12 per hour. If a packet of bubble gum sells for $1.00, then
A) Joanne is creating a $2.00 per hour profit for the firm.
B) Joanne is creating a $2.00 per hour loss for the firm.
C) the Bubby Gum company should pay Joanne more.
D) the Bubby Gum company should decrease the price of the bubble gum so it sells more and makes a larger profit.
E) None of the above answers is correct because more information about Joanne's real wage is needed to decide what to do.
B
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Suppose firms in an industry hire unskilled labor and skilled labor. Unskilled labor is a substitute for capital and skilled labor is a complement with capital. A decrease in the real price of capital would
A) cause the demand for labor to increase, raising wages of both skilled and unskilled labor. B) cause the demand for unskilled labor to increase and the demand for skilled labor to decrease. The wage of unskilled labor would rise relative to the wage of skilled labor. C) cause the demand for unskilled labor to decrease and the demand for skilled labor to increase. The wage of unskilled labor would decrease relative to the wage of skilled labor. D) cause the demand for both kinds of labor to decrease. Wages rates of both kinds of labor would decrease too.
A tax levied on imported goods is called a(n):
a. excise tax. b. quota. c. foreign profits tax. d. tariff.