Suppose that this graph describes the current labor market for high school teachers:
Given an initial wage of w*, then immediately following a decrease in supply:
A. the reservation wage of each remaining teacher will fall.
B. there will be a shortage of high school teachers.
C. there will be an excess supply of high school teachers.
D. the equilibrium wage will fall.
Answer: B
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Wealthy people are more likely than poor people to use airplanes rather than busses for interurban travel because
A) their demand for transportation is more elastic. B) their demand for transportation is more inelastic. C) they can better afford to use a higher-cost mode of transportation. D) they are more likely to ignore the relative costs of busses and airplanes. E) traveling by airplane usually costs them less than traveling by bus.
What is the government's major problem involved in reaching the optimal level of provision for public goods?
What will be an ideal response?
In the above figure, the equilibrium exchange rate between U.S. dollars and British pounds is
A) A. B) B. C) C. D) W.
Figure 10-1
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A firm earns a profit of exactly zero at its optimal output level only if
A. P = MR. B. P = MC. C. P = AC. D. P = SRAVC.