We assume leisure is a normal good. This implies that
A) an increase in taxes decreases the demand for leisure.
B) households maximize utility.
C) preferences over consumption are well defined.
D) an increase in the wage increases demand for leisure.
A
You might also like to view...
If the expected path of one-year interest rates over the next five years is 4 percent, 5 percent, 7 percent, 8 percent, and 6 percent, then the expectations theory predicts that today's interest rate on the five-year bond is
A) 4 percent. B) 5 percent. C) 6 percent. D) 7 percent.
Private savings and thus investment could be increased by which of the following government policies, ceteris paribus?
A) elimination of the corporate income tax B) allowing corporations to use "replacement cost accounting" C) exemption of interest earnings from income taxation D) all of the above.
Starting a fishing business
a. is safe because the price of fish is stable b. requires little prior knowledge c. involves no significant entry costs d. is a risky way to make a living e. does not involve opportunity costs
If Bob has one piece of gum in his mouth, he gains a utility of 12. If he adds a second piece to the first, it yields a marginal utility of 6; adding a third will bring marginal utility of 1. Adding a fourth piece will make Bob choke, yielding a marginal utility of -4. We can say:
A. Bob's total utility from chewing four pieces of gum would be 23. B. Bob's total utility will decrease if he chews the fourth piece of gum. C. Bob's total utility decreases after the first piece of gum. D. Bob's total utility will be maximized if he eats two pieces.