EBK ECON MICRO
EBK ECON MICRO
6th Edition
ISBN: 9781337671828
Author: MCEACHERN
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Concept explainers

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Chapter 11, Problem 1P

A

To determine

in what manner firms and people decide if it’s worth to make investment in capital improvements.

Concept Introduction:

Capital Improvement: an addition or arrangement that improves the value of a property or replacement or upgrade that prolongs the lifespan of the asset.

A

Expert Solution
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Explanation of Solution

The firms and individuals determine if it’s worth it to invest in these resources based on these points:

The firms or individuals determine if it is worth to invest in capital improvements when the costs of additional capital are lesser than the revenue increase with the additional capital. In simple words, when the marginal returns from the capital is greater than the marginal cost of capital.

B

To determine

in what manner firms and people decide if it’s worth for new hires.

Concept Introduction:

Hiring: is defined as a practice of evaluating, finding and establishing a working relationship between new employees, contractors, interns etc

B

Expert Solution
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Explanation of Solution

For hiring additional workers, the firms and the individuals take their decisions by looking at the marginal returns of additional workers to the costs of hiring the additional workers. When the returns are greater than the costs of employing an additional worker, it would be worth hiring.

C

To determine

in what manner firms and people decide where to work.

C

Expert Solution
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Explanation of Solution

Despite this being akin to individuals and firms independently, in most cases, the location where to work and expansion is based on the conditions such as proximity to the market, the rules and regulations of a particular locality and availability of resources.

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Discuss the preferred deterrent method employed by the Zambian government to combat tax evasion, monetary fines. As noted in the reading the potential penalty for corporate tax evasion is a fine of 52.5% of the amount evaded plus interest assessed at 5% annually along with a possibility of jail time. In general, monetary fines as a deterrent are preferred to blacklisting of company directors, revoking business operation licenses, or calling for prison sentences. Do you agree with this preference? Should companies that are guilty of tax evasion face something more severe than a monetary fine? Something less severe? Should the fine and interest amount be set at a different rate? If so at why? Provide support and rationale for your responses.
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