The substitution effect of an increase in the wage rate on the quantity of leisure demanded
A. gives people less purchasing power and so they will demand less leisure.
B. makes leisure more expensive which leads people to work more.
C. gives people more purchasing power and causes people to demand more leisure.
D. makes leisure less expensive which causes people to work less.
Answer: B
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In the market for reserves, when the federal funds rate is above the interest rate paid on excess reserves, the demand curve for reserves is
A) vertical. B) horizontal. C) positively sloped. D) negatively sloped.
Shelly purchases a leather purse for $400. One can infer that:
A. her reservation price was at least $400. B. her reservation price was exactly $400. C. she paid too much. D. her reservation price was less than $400.
At prices above a consumer's reservation price:
A. the opportunity cost is less than the benefit from having the good. B. the buyer will purchase the good. C. the opportunity cost is greater than the benefit from having the good. D. the willingness to pay is greater than the price.
Define the terms "economies of scale," "constant returns to scale," and "diseconomies of scale." Among these three situations, operating in which stage is likely to be most profitable for a firm?
What will be an ideal response?