When firms in a U.S. industry outsource some of their production,
A) both U.S. labor demand and U.S. wages in the industry fall
B) U.S. labor demand falls, but U.S. wages are not affected.
C) U.S. labor demand remains unchanged, but U.S. wages fall.
D) U.S. labor demand falls, but U.S. wages increase.
A
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If demand is inelastic, a drop in price will raise total expenditure.
Answer the following statement true (T) or false (F)
Janelle spends all of her income on songs from iTunes ($1 each) and applications ($5 each) for her iTouch. At current prices, she makes her best affordable choice and purchases 20 songs and 4 applications
Suppose, for a limited time only, applications are buy-one, get-one-free and she purchases 30 songs and 4 applications. Which of the following statements is TRUE? A) For songs, the substitution effect just equals the income effect. B) For songs, the income effect is stronger than the income effect for applications. C) For applications, the substitution effect is stronger than the income effect. D) For applications, the income effect is stronger the income effect for songs.
If expectations are formed rationally, then individuals
A) will have a forecast that is 100% accurate all of the time. B) change their forecast when faced with new information. C) use only the information from past data on a single variable to form their forecast. D) have forecast errors that are persistently low.
If the income elasticity of a good is positive, we can conclude that the good is
a. an inferior good. b. a normal good. c. a luxury good. d. a necessity.