If the economy is producing at point a on its production possibility frontier, then
A) all of the country's workers are employed.
B) all of the country's workers are specialized in one product.
C) all of the country's capital is used for one product.
D) all of its capital is used, but not efficiently.
E) all of the country's exports are produced in equal amounts.
A
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A tax on wages will
a. reduce labor supply since leisure becomes cheaper. b. raise labor supply since income is reduced. c. have an unpredictable impact on labor supply since there are both substitution and income effects. d. have a predictable impact since economists know substitution effects will dominate.
Suppose a firm has a variable cost function VC = 20Q with avoidable fixed cost of $50,000. What is the firm's average cost function?
A. AC = 50,000 + 20Q B. AC = (50,000/Q) + 20 C. AC = 50,000 + 40Q D. AC = 20