Mike is maximizing utility by working 10 hours a week and studying 10 hours a week. Mike has only 20 hours to devote to either working or studying. If Mike realizes that another hour of studying will improve his grade on an exam, thus raising the utility of another hour of study, Mike will:
A. work fewer hours, shifting his labor supply curve to the left.
B. study less to raise the marginal utility of studying even more.
C. work fewer hours, moving him down along his labor supply curve.
D. substitute work for studying, raising his total utility.
Answer: A
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Along a supply curve,
A. supply changes as price changes. B. quantity supplied changes as price changes. C. supply changes as technology changes. D. quantity supplied changes as technology changes.
The peak phase of the business cycle represents
A) a temporary maximum output level of Gross Domestic Product (GDP). B) an increase in foreign investment. C) a labor surplus. D) falling prices.
We know that in the long run, perfectly competitive firms produce where MC = MR and end up making zero economic profit. The profit-maximizing output level for a monopolist is where
a. price is maximized b. quantity is maximized c. ATC curve is minimized d. maximum efficiency is achieved e. MR = MC
If nominal wages and salaries are fixed as firms change product prices, the short-run aggregate supply curve (SRAS) is:
a. vertical. b. positively sloped. c. negatively sloped. d. horizontal.