If a consumer purchases only two goods (X and Y ) and the demand for X is elastic, then a rise in the price of X
a. will cause total spending on good Y to rise.
b. will cause total spending on good Y to fall.
c. will cause total spending on good Y to remain unchanged.
d. will have an indeterminate effect on total spending on good Y.
a
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Lane and Riley are the only two residents in a neighborhood, and they share the same driveway. They would like to have the driveway paved. The value of the paved driveway is $1,500 to Lane and $900 to Riley. Regardless of who pays for the paving both people will benefit from it. What is the most a contractor can charge to pave the driveway and still be assured of being hired by at least one of them?
A. $1,500 B. $600 C. $900 D. $2,400
Which of the following best describes the marginal product of labor for an additional employee in a landscaping firm?
A. The additional profits the firm earns because of that employee B. The additional wages the firm must pay in labor costs because of that employee C. The extra money the firm brings in because of that employee D. The number of additional acres the firm can mow in a week because of that employee
Economists who criticize trade adjustment assistance argue that:
A. it only benefits a very small fraction of all unemployed workers. B. money spent on the program overstimulates aggregate demand and threatens to cause inflation. C. benefits are too low to provide unemployed workers with a livable wage. D. it distorts patterns of foreign trade, reducing the gains from trade.
If the government cuts taxes today, issuing debt today and repaying the debt plus interest next year, a rational taxpayer will
A. increase saving today, leaving consumption unchanged. B. spend the full amount of the tax cut today and reduce consumption next year. C. increase consumption today, before taxes go up next year. D. leave a smaller gross bequest to her or his heirs.