A firm purchases more capital equipment, which is a subsitute to labor. We would expect to observe
A. an increase in the wage rate paid for labor by this firm.
B. a rightward shift in the supply curve of labor to this firm.
C. a decrease in the supply of labor for this firm.
D. a decrease in the demand for labor by this firm.
Answer: D
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Using the above figure, if the government levies a new unit tax in this market, S represents the original supply curve, and St represents the after-tax supply curve, then the revenues that the government collects from imposing this tax is represented
on this graph by A) OAEG. B) OBCG. C) BAEC. D) CEF.
The minimum efficient scale of a firm:
A. is realized somewhere in the range of diseconomies of scale. B. occurs where marginal product becomes zero. C. is in the middle of the range of constant returns to scale. D. is the smallest level of output at which long-run average total cost is minimized.