Explain why funds available to pay the fixed inputs are equal to the area of the triangle below the value of marginal product of labor (VMP) and above the wage
The intersection of the VMP and the wage determines the number of workers to be hired. Hence the rectangular area bound by the wage and the number of workers employed at that wage rate give the firm's expenditure on its variable input, i.e. labor. The triangular area above the wage line and below the VMP is therefore the funds that the firm has left to use on its fixed inputs.
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If the tariff on computers is not changed, but domestic computer producers shift from domestically produced semiconductors to imported components, then the effective rate of protection in the computer industry will
A) increase. B) decrease C) remain the same. D) depend on whether computers are PCs or "Supercomputers." E) no longer apply.
Which of the following is (are) true of a monopoly? (i) A monopoly has the ability to set its price. (ii) A monopolists marginal revenue will always increase when it lowers the price of its product. (iii) A monopoly can never experience an economic loss
a. (i) only b. (ii) only c. (i) and (ii) only d. (ii) and (iii) only