Explain reasons that may make payments based on marginal productivity have widely varied results.
What will be an ideal response?
Income derived from payments according to marginal productivity may sound fair,
but it may lead to very unequal incomes because ownership of resources is initially
divided unequally. For example, individuals have different opportunities to obtain
education and training. Some individuals inherit property; in contrast, others may have
physical or mental disabilities. In addition, imperfections in labor markets (e.g., unions
and licensing restrictions) can lead to factory owners not receiving income according to
their marginal productivity. Discrimination can also distort the linkage between income
and marginal contribution to output.
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What is the difference between a sterilized and non-sterilized central bank intervention in the foreign exchange market?
What will be an ideal response?
A firm that shuts down in the short run experiences losses equal to
A) zero. B) total variable costs. C) total fixed costs. D) total marginal costs.