Suppose that a union successfully negotiated a 10 percent wage increase and the quantity of labor demanded decreased by 10 percent. Given a fixed labor demand curve, we can conclude that:
A. the labor demand curve is upsloping.
B. labor demand is elastic.
C. labor demand is unit-elastic.
D. the coefficient of elasticity of labor demand is less than 1.
Answer: C
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Which of the following statement(s) best describes trade-offs?
a. The trade-offs in many production possibilities frontiers are represented by a straight line because the law of diminishing returns holds that as resources are added to an area, the marginal gains tend to diminish. b. The trade-offs in many production possibilities frontiers are represented by a curved line because the law of diminishing returns holds that as resources are added to an area, the marginal gains tend to increase. c. The trade-offs in many production possibilities frontiers are represented by a straight line because the law of diminishing returns holds that as resources are added to an area, the marginal gains tend to increase. d. The trade-offs in many production possibilities frontiers are represented by a curved line because the law of diminishing returns holds that as resources are added to an area, the marginal gains tend to diminish.
Even though international trade is undertaken voluntarily, a country that engages in trade may not benefit from it.
Answer the following statement true (T) or false (F)
When we derive the demand curve for a good, we should remember that the
a. income effect must be greater than the substitution effect. b. substitution effect must be greater than the income effect. c. substitution effect must be in the same direction as the income effect. d. income effect and the substitution effect may work in the same or in opposite directions.
Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. Larry maximizes his economic surplus by attending:
A. State College. B. NoName U because he has a full scholarship there. C. NoName U because the annual cost is only $20,000. D. Elite U.