Question

The so-called 90-10 ratio (the hourly wage at the 90th percentile compared to that at the 10th percentile) was roughly how much in 2007?

Multiple Choice

• 2.5

• 4.5

• 8.0

• 10.5

Answer the question on the basis of the accompanying table that shows average total costs (ATC) for a manufacturing firm whose total fixed costs are $10.

Output	ATC
1	$40
2	27
3	29
4	31
5	38

The total cost of producing 4 units of output is

Multiple Choice

• $31.

• $87.

• $124.

• $137

A purely competitive firm

Multiple Choice

• must earn a normal profit in the short run.

• cannot earn economic profit in the long run.

• may realize either economic profit or losses in the long run.

• cannot earn economic profit in the short run.

According to data compiled by the Bureau of Economic Analysis, from 1960 to 2015, government transfer payments as a percentage of U.S. output have

Multiple Choice

• decreased as a result of improvements in private pension and health insurance plans.

• increased slightly at about the same rate as population.

• tripled as a percentage of output.

• remained approximately constant.

Fixed cost is

Multiple Choice

• the cost of producing one more unit of capital, for example, machinery.

• any cost that does not change when the firm changes its output.

• average cost multiplied by the firm's output.

• usually zero in the short run.

The effect of the so-called welfare cliff is that it discourages welfare recipients from doing the following, except

Multiple Choice

• working more hours.

• finding and transitioning into higher-paying jobs.

• applying for an extension of the welfare payment.

• acquiring education and training for better jobs.

he equations for the demand and supply curves for a particular product are P = 10 − 0.4Q and P = 2 + 0.4Q, where P is price and Q is quantity expressed in units of 100. After an excise tax is imposed on the product, the supply equation is P = 3 + 0.4Q. The efficiency loss of this tax is

Multiple Choice

• $125.00.

• $62.50.

• $87.50.

• $1.00

Answer 1

• The so-called 90-10 ratio (the hourly wage at the 90th percentile compared to that at the 10th percentile) was roughly how much in 2007 was 4.5.
• Total cost = Output ATC = 4 $31 = $124
• In the long run, if firms in a purely competitive market are earning positive economic profits, more firms will enter into the market, which will shift the supply curve to the right. As the supply curve shift to the right, the equilibrium price will go down. As the price goes down, economic profits will decrease until it becomes zero. therefore the answer is .......... can not earn economic profit in the long run.
• According to data compiled by the Bureau of Economic Analysis, from 1960 to 2015, government transfer payments as a percentage of U.S. output have increased slightly at about the same rate as population.

• Fixed cost is any cost that does not change when the firm changes its output.

Initial equilibrium price =6 and quantity = 10

After tax, equilibrium price = 6.5 and quantity = 8.75

change in price = 0.5 and change in quantity = 1.25

Economic loss = (1.25 0.5 ) 100 = 62.50