Assume that food is measured on the horizontal axis and clothing on the vertical axis. If the price of food falls relative to that of clothing, the budget line will:
A) become flatter.
B) become steeper.
C) shift outward.
D) become steeper or flatter depending on the relationship between prices and income.
A
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Explain the relationship between opportunity costs and money costs. Can they be treated as identical?
What will be an ideal response?
At the quantity of 1000 tacos, the marginal social benefit of a taco is $.50 and the marginal social cost is $.60. To produce the efficient quantity of tacos
A) more tacos should be produced. B) fewer tacos should be produced C) there should be no change in the amount of tacos produced. D) More information on production costs is needed to determine the efficient level of tacos.
Labor demand is decreasing in the wage because
A) the substitution effect is larger than the income effect. B) the income effect is larger than the substitution effect. C) the production function is concave. D) the marginal product of labor is increasing in labor.
Suppose that a more efficient way to produce a good is discovered, thus lowering production costs for the good. This will cause: a. an increase in supply, or a rightward shift of the supply curve
b. a decrease in supply, or a leftward shift of the supply curve. c. an increase in quantity supplied, or a movement down the supply curve. d. a decrease in quantity supplied, or a movement up the supply curve.