Assume that the substitution effect dominates the income effect. An increase in both consumption and labor supply would result from
A. a decrease in tax rates.
B. an increase in tax rates.
C. an increase in transfer payments.
D. a decrease in transfer payments.
Answer: A
You might also like to view...
Suppose price is measured along the vertical axis on a graph. When price changes, there will be a
a. rotation of the curve. b. shift of the curve. c. movement along the curve. d. change in the slope of the curve.
During the current quarter, a firm produces consumer goods and adds some of those goods to its inventory rather than selling them. The value of the goods added to inventory is
a. not included in the current quarter GDP. b. included in the current quarter GDP as investment. c. included in the current quarter GDP as consumption. d. included in the current quarter GDP as a statistical discrepancy.
Marginal revenue is equal to price for a perfectly competitive firm because:
A. total revenue increases by the price of the good when an additional unit is sold. B. total revenue increases by less than the price of the good when an additional unit is sold. C. firms need to lower price to increase the quantity sold. D. firms can increase price and still increase the quantity sold.
Bonnie has just purchased a crystal vase she saw advertised when she went online to find her local weather forecast. The Internet ad is an example of
A. mass marketing. B. direct marketing. C. indirect marketing. D. interactive marketing.