Suppose a labor-augmenting technology were developed for a product that increased the marginal product of labor for all workers. Which of the following would happen in the labor market for this product?
a. Demand would decrease.
b. Demand would increase.
c. Supply would decrease.
d. Supply would increase.
b
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If a fire insurance company requires firms buying fire insurance to install automatic sprinkler systems, the insurance company is trying to reduce
A) the problem of adverse selection. B) asymmetric information. C) the moral hazard problem. D) sunk costs.
What happens to real money demand (rise, fall, no change) due to a change in each of the following factors?
(a) A tax on stock market transactions is introduced. (b) Computerized bond trading reduces transactions costs. (c) People's average level of wealth rises. (d) The threat of a recession increases the riskiness of stocks and bonds. (e) The interest rate paid on checking account balances declines. (f) The price level falls in a one-time jump.
Ceteris paribus, as the price of a good or service increases
A) people will buy more of it. B) people will buy less of it. C) people will want less of it. D) people will want more of it.
In an input market, economic rent is defined as
a. the total remuneration paid to a factor of production. b. the minimum amount required to retain a factor of production in its present use. c. the total cost for a firm of renting land, equipment, and buildings. d. the extent to which payments to a factor of production exceed the minimum amount required to retain it in its present use.