Suppose Amy has 100 efficiency units of labor, Bill has 50 efficiency units of labor, and Chris has 20 efficiency units of labor. Which of the following is true?
A. A firm will never hire Chris, regardless of wages.
B. A firm will always hire Amy over Chris, regardless of wages.
C. A firm will never hire Bill, regardless of wages.
D. A firm will hire Amy if her wage is at least twice that of Bill's and at least five times that of Chris's.
E. A firm will hire Amy if her wage is at most double that of Bill's and at most five times that of Chris's.
Answer: E
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Refer to Figure 18.3. In autarky, the maximum amount of pogo sticks that Livonia can produce is
A) 120. B) 100. C) 80. D) 40.
A Californian student consumes Internet services (I) and books (B). Her preferences are represented by a Cobb-Douglas utility function:
U(I,B) = I1/4B1/4 The prices of each good is $2 and the student has an income of $200. Over the course of the past year, the price of internet services has risen to $4, but the price of books has remained the same. The government has decided provide this student with additional money to compensate for the higher price of internet services. In order to determine the transfer the government has three consultants who have made the following suggestions: Consultant A: The student's income should be increased by a percentage found using a consumer price index (CPI). Consultant B: The additional income should allow the student to get her initial level of utility. a. Find the consumer's optimal bundle before the increase in price occurs. b. Find the consumer's optimal bundle after the increase in price occurs with income still at $200. c. Find the amount of the transfer implied by consultant A. d. Is the student necessarily better or worse off than before from such a transfer implied by consultant A? Explain why. e. Is the transfer implied by consultant B more or less than the amount implied by A? Explain. What is the precise dollar amount implied by consultant B?
Diminishing marginal returns means that aggregate production function is
a. linear b. downward sloping c. upward sloping d. concave e. convex
The consumer's income is $800.According to the above figure, what is the consumer's marginal rate of substitution in equilibrium?
A. 2.5 B. 1.5 C. 2 D. 0.8 E. unable to tell from information given