A package delivery service uses vans and employees to deliver the maximum number of packages given a fixed budget. The last van added 600 packages to total output, while the last employee added 500 packages. If vans cost $400 per week and employees earn $300 per week, the firm
A. could deliver more packages with the same budget by using more employees and fewer vans.
B. could deliver more packages with the same budget by using more vans and fewer employees.
C. should use more vans and fewer employees because the last dollar spent on vans added more to total output than the last dollar spent on employees.
D. is delivering the maximum number of packages given the fixed budget.
E. both b and c
Answer: E
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Tariffs and quotas are effective in protecting industry
a. but at very high cost per job saved. b. and at very low cost per job saved. c. but have not saved any jobs in the industries. d. and do not distort the economy in the process.
The natural rate of unemployment is best described as
A. 0 percent. B. the unemployment rate when the economy is at its peak. C. the sum of cyclical, frictional and structural unemployment. D. the unemployment rate that prevails in the long run.