Assume fixed costs are 470 and labor costs $20 per unit. The first laborer produces 20 units of output. Subsequent hires add 5 units less to production than the previous worker. Thus the second worker adds 15, the third adds 10 etc. If the fifth laborer adds 25 units to the short run production output and the sixth laborer adds 20 units to the total output and the firm can hire all the labor it wants at the going wage we can be sure that
A. average variable cost is increasing.
B. marginal cost is increasing.
C. average total cost is increasing.
D. None of these is correct because all the costs listed are decreasing.
Answer: B
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Suppose Political Party A proposes a tax cut on business income to stimulate the economy. Political Party B opposes the tax cut on business income asserting that it would only help businesses, not the average working man and woman
If you were hired as an economist for Political Party A, explain how the tax cut on business income would help the average working man and woman.
Chris had a before-tax income of $20,000 and paid taxes of $3,000 . Pat had a before-tax income of $10,000 and paid taxes of $1,000 . Based on this information, which of the following is correct?
a. the tax system is regressive b. the tax system is proportional c. the tax system is progressive d. the tax system is based on the benefits received e. there is insufficient information to answer the question