Refer to Reducing Long-Run Labor Usage. The substitution effect of the wage change is the movement from point X to
The following questions refer to the accompanying diagram, which shows a firm reducing its long-run labor usage from L0 to L1 in response to an increase in the wage rate.
a. point A.
b. point B.
c. point C.
d. point D.
b. point B.
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Suppose a social entrepreneur needs to raise money for a public good. He has to allocate his fund raising package to activities that persuade people of the importance of the public good and to activities that make people feel good about giving. As the population gets large, which of these do you think he will increasingly emphasize?
What will be an ideal response?
Suppose a person's utility for leisure (L) and consumption (Y) can be expressed as U = Y + L0.5. Show what happens to the person's labor supply curve when the income tax is cut from 70 percent to 30 percent
Denote hours worked as H and wage per hour as w.
Incentive contracts typically result in higher risk-related compensation to agents on average,
a. even so, they are always worth it b. this does not affect their desirability c. as a consequence, they may cost more than the problem they solve d. therefore, they are never worth it
Economies of scope often occur because
A) a production facility can be used to produce more than one product. B) it forces firms to search for economies of scale. C) it enhances the ability to find market niches. D) managers are able to multi-task in product markets