When tastes are quasilinear in leisure, which of the following is true:
A. The wage elasticity of labor supply is zero.
B. The wage elasticity of labor supply is positive.
C. The wage elasticity of labor supply is negative.
D. The wage elasticity of demand is negative.
E. Both (a) and (d).
F. Both (b) and (d).
G. Both (c) and (d).
Answer: F
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Consider an income tax and a head tax, the sizes of which have been set so that the government collects the same amount of money under each tax. Which tax does the consumer prefer?
a. The consumer is indifferent between the two taxes, since he pays the same amount of money under each tax.
b. The consumer prefers the head tax, because it does not lower the relative wage as does the income tax.
c. The consumer prefers the income tax, because it can be avoided by increasing the amount of leisure time consumed.
d. The consumer may prefer either tax, depending on whether the income tax increases or decreases the number of hours of work at the optimum.
If the currency drain ratio is zero, which of the following situations leads to the greatest total increase in the quantity of money?
A) an increase in the monetary base of $250,000 when the desired reserve ratio is 15 percent B) an increase in the monetary base of $100,000 when the desired reserve ratio is 5 percent C) an increase in the monetary base of $120,000 when the desired reserve ratio is 10 percent D) an increase in the monetary base of $100,000 when the desired reserve ratio is 50 percent E) an increase in the monetary base of $200,000 when the desired reserve ratio is 20 percent
In investment banking, a conflict usually is present between the issuers of securities, who ________, and investors, who ________
A) benefit from unbiased auditing; desire unbiased consulting B) desire unbiased research; benefit from optimistic research C) benefit from optimistic research; desire unbiased research D) desire unbiased consulting; benefit from unbiased auditing
With price leadership,
a. price equals marginal cost b. the industry output is generally greater than a competitive industry c. prices are set by explicit collusion d. firms price discriminate among different classes of customers e. there is no formal agreement regarding prices