The marginal rate of substitution is the
A) rate at which the consumer will give up one good for an additional unit of the other good, such that total satisfaction is constant.
B) rate at which the consumer can trade one good for the other in the marketplace.
C) change in the quantity of one good that changes the utility received by one unit.
D) same thing as the marginal utility of a good.
Answer: A
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Under which of the following scenarios does an increase in the wage tax cause a drop in employment but no deadweight loss?
A. When the wealth effect for workers is larger than the substitution effect. B. When the wealth effect for workers is smaller than the substitution effect. C. When the wealth effect for workers is equal to the substitution effect. D. It is possible under any of these scenarios. E. There is no scenario under which this is possible.
"The decision to employ an additional unit of labor depends on whether the value of marginal product is greater than or smaller than the wage rate." Is the previous statement correct or incorrect?
What will be an ideal response?
Negative supply shocks confront the Fed with a dilemma because
a. full employment is no longer possible b. the costs of fulfilling one objective are paid in terms of failure to meet the other c. inflation cannot be prevented considering the reduced supply d. all policy choices are equally undesirable e. such shocks are entirely unpredictable
An economist might be hired to answer which of the following questions?
a. What will the price of oil be next year? b. Why is the median income of women about half the median income of men? c. How much will interest rates change as the federal deficit decreases? d. How much will inflation change if import restrictions are imposed? e. All of the above are correct.