Suppose a study showed that as the income of doctors increased, doctors spent more time on the golf course and less in the office. What would such a conclusion say about the relative sizes of substitution and income effects?
What will be an ideal response?
The supply curve for doctor labor hours is bending backward with respect to wage. This means the income effect (as income rises, buy more leisure) outweighs the substitution effect (as wages rise, choose more work and less leisure).
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Refer to Figure 11.2. Suppose that Ca = 40, MPC = 0.8, I = 10. Equilibrium income is
A) 40. B) 50. C) 250. D) 400.
Net exports of goods and services are defined as the
A) value of the goods we sell to foreigners. B) income we receive from selling goods to foreigners. C) value of exports minus the value of imports. D) value of exports minus the income we receive from foreigners. E) value of exports plus the income we receive from foreigners.
Government regulations can create de facto monopoly results
a. True b. False
Assume that in Canada the opportunity cost of producing one television set is two bushels of wheat. Assume that in the United States the opportunity cost of producing one bushel of wheat is two television sets. If these two countries specialize according to comparative advantage and then trade with each other:
A. the United States will export both televisions and wheat. B. Canada will export both televisions and wheat. C. Canada will export wheat and import televisions. D. the United States will export wheat and import televisions.