A person works more hours at a higher wage if the substitution effect
a. equals the income effect.
b. equals zero.
c. is smaller than the income effect.
d. is larger than the income effect.
Ans: d. is larger than the income effect.
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Assuming a required reserve ratio of 5%, interest rate on reserves of 1%, and interest rate on loans of 6%, what is the effective cost of the reserve requirement on a $10,000 deposit?
A) 0.05% B) 0.25% C) 0.30% D) 1%
The process of entry and exit into a monopolistically competitive market continues until:
A. profits are zero. B. long-run equilibrium is reached. C. price is equal to average total cost. D. All of these statements are true.
The theory of rent formulated by ______ is still used by most economists today.
A. Karl Marx B. David Ricardo C. Frank Knight D. Joseph Schumpeter
Suppose that a haircut will give Dawn 2,000 units of utility and cost her $40, whereas a manicure costs $25 and yields 1,000 units of utility. Most likely Dawn should:
A. choose the haircut because she will receive 50 units of utility per dollar compared with 45 units of utility per dollar for the nails. B. be indifferent between the two choices. C. choose the haircut because each unit of utility will cost her $0.02 compared with $0.025 for the nails. D. choose the nails because she will obtain 50 units of utility per dollar compared with 40 units of utility per dollar for the haircut.