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Posts by cheetah

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Maximizing profits? No. For any given level of capital (or land, or anything else), the Marginal Revenue Product of Labor must be equal to its Marginal Cost (or the wage rate if we assume the labor market is competitive). Given the numbers above, $100 > $10 (this basically ...

Market price with no tax is where supply equals demand, so at $7. b) The two dollar tax is reflected in the price that people have topay, but it does not give a firm extra income. For instance, pricewas $7 in part a. Now with the tax, people pay $9, but the firmonly earns $7. ...

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