Figure 18-1

question 570

Essay

Figure 18-1. The figure shows the relationship between the number of mechanics hired and the number of car repairs performed per day at a car-repair shop.
-Refer to Figure 18-1. If the shop charges $150 per repair and pays each of its mechanics a wage of $700 per day, then what is the marginal profit of the second mechanic?

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Definitions:

Previously Existing Distortions

Inefficiencies or imperfections already present in a market before a new policy or change was implemented.

Distortionary Tax

A tax that causes people to alter their behavior and economic decisions from what they would have chosen in the absence of the tax.

Principle of Neutrality

The concept that certain measures, such as fiscal policies, should be designed to have a neutral effect on economic choices and competition.

Economic Decisions

Choices made by individuals, businesses, or governments regarding the allocation of scarce resources to satisfy needs and desires.