If wages drop below the market equilibrium level in a competitive labor market:
A. firms will demand more labor than workers are willing to supply.
B. there won't be enough workers willing to work at that wage.
C. firms will have to offer higher wages to attract the workers they need.
D. All of these statements are true.
Answer: D
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The substitution effect of an increase in the price of Raisin Bran refers to
A) the decrease in the demand for Raisin Bran when its price rises. B) the result that consumers will now switch to a substitute good such as Cheerios, and the demand curve for Raisin Bran shifts to the left. C) the fact that the higher price of Raisin Bran relative to its substitutes, such as Cheerios, causes consumers to buy less Raisin Bran. D) the fact that the higher price of Raisin Bran lowers consumer's purchasing power, holding money income constant.
In the presence of a negative externality in production, a monopoly will produce
A) more than the social optimum. B) less than the social optimum. C) the social optimum. D) All of the above are possible.
The market and public sector are similar in that
A) there is competition amongst the participants in both sectors. B) the resources used in both sectors are scarce. C) the participants in both sectors react to incentives. D) All of the above are true.
A price increase will cause an increase in total revenue when:
A. the price effect outweighs the quantity effect. B. the quantity effect outweighs the price effect. C. demand is perfectly elastic. D. demand is unit elastic.