Suppose That All Workers Place a Value on Their Leisure

question 26

Multiple Choice

Suppose that all workers place a value on their leisure of 75 goods per day. The production function relating output per day Y to the number of people working per day N is Y = 500N - 0.4N² and the marginal product of labour is MPN = 500 - 0.8 N. A 25% tax is levied on wages. In terms of lost output, what is the cost of the distortion introduced by this tax?

• A) 63
• B) 531
• C) 2734
• D) 3751

---

Definitions:

Harlow

Refers to Harry Harlow, a psychologist known for his research on maternal separation and social isolation in rhesus monkeys.

Vygotsky

Lev Vygotsky, a Russian psychologist known for his theory on social development and the concept of the Zone of Proximal Development.

Formal Operations

The stage in Piaget’s theory of cognitive development where adolescents and adults develop the ability to think about abstract concepts and logically test hypotheses.

Concrete Operations

A stage in cognitive development, according to Piaget, where children gain the ability to think logically about concrete events.