Firms may react to a payroll tax by
A. hiring more labor.
B. reducing their output.
C. shifting to less capital intensive techniques.
D. substituting labor for capital.
Answer: B
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The endowment effect is the tendency of people to be unwilling to sell a good they already own even if they are offered a price greater than they would be willing to pay to buy the good if they did not already own it
Indicate whether the statement is true or false
In the early 1980s, rising interest rates caused a tremendous __________ in the value of savings-and-loan __________
A) inflow; liabilities B) inflow; assets C) outflow; liabilities D) outflow; assets
When a product's price increases from $800 to $1,200, the quantity demanded decreases from 11,000 to 9,000 . Based on this information, the price elasticity of demand (in absolute terms) is estimated to be equal to: a. 0.5
b. 2.0. c. 0.25. d. 4.0.
Falling output, in the short run, could be due to:
A. an increase in short-run aggregate supply. B. a reduction in aggregate demand. C. an increase in long-run aggregate supply. D. an increase in aggregate demand.