In general, the optimal taxation literature finds that a society ...

[EAugust]

In general, the optimal taxation literature finds that a society can maximize social welfare through income redistribution.
 
  a. True b. False

Question 2

Suppose firms A and B each make T-shirts. Firm A's production function is q = L0.5 K0.5. Firm B's production function is q = 1.2  L0.5 K0.5.
 
  If the two firms each hire the same amounts of capital and labor, compare the two firms in terms of APL and MPL.

[aruss1303]

Answer to Question 1

a

Answer to Question 2

Firm B's APL and MPL will equal 1.2 times the APL and MPL of firm A.