Suppose capital is readily substitutable for labor and that the price of capital falls. We can conclude that the:
A. Substitution effect will tend to reduce the demand for labor
B. Output effect will tend to reduce the demand for labor
C. Demand for labor will necessarily decline
D. Demand for labor will necessarily increase
A. Substitution effect will tend to reduce the demand for labor
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Which of the following is true? a. Velocity is not constant over time
b. The best way to study economic activity is to start with the equation and then integrate the money supply and the volume of international trade. c. Control over the money supply implies that the Fed has precise control over real GDP. d. All of the above are true.
If an airline overbooks it pays people who volunteer to leave the overbooked flight. This system is better than drawing randomly from a hat the people who should miss the flight because
A. it is quicker and helps keep the flight on schedule. B. it gives everyone a chance to get money they hadn't counted on. C. those with the least to lose are the ones who miss the flight. D. it is the most equitable way of solving the situation.
Sellers can increase total revenues by charging different individuals the maximum amount they are willing to pay.
Answer the following statement true (T) or false (F)
Suppose Smith's oil refinery and Jones' paper mill both pollute a river and both firms operate under a system of marketable pollution permits. If it costs Smith $45 to reduce pollution by 500 gallons per day, and Jones can reduce costs by $65 by increasing pollution by 500 units per day:
A. the firms cannot gain by trading the right to pollute. B. both firms can benefit if Smith trades the right to increase pollution by 500 gallons to Jones for $30. C. both firms can benefit if Smith trades the right to increase pollution by 500 gallons to Jones for $50. D. both firms can benefit if Jones trades the right to increase pollution by 500 gallons to Smith for $30.