Suppose the price of leather used to produce shoes increases. The higher price of leather ________ the supply of shoes, and the supply curve of shoes ________
A) does not change; does not shift
B) decreases; shifts rightward
C) increases; shifts rightward
D) increases; shifts leftward
E) decreases; shifts leftward
E
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A bowed out production possibilities frontier shows
A) that resources are equally productive in all uses. B) increasing opportunity cost. C) that resources are not equally productive in all uses. D) Both answers B and C are correct. E) Both answers A and B are correct.
If the price level rises by 3 percent and workers' money wages increase by 3 percent, then the
A) quantity of labor demand will decrease. B) quantity of labor demand will increase. C) quantity of labor demanded does not change because there is no change in the real wage rate. D) Any of the above could occur depending on the magnitude on the dollar increase in the price level versus the dollar increase in the wage rate.
When a country's export spending exceeds import spending, the country is experiencing a:
A) trade deficit. B) trade surplus. C) budget deficit. D) none of the above.
Continuing with the same family from the preceding question, suppose a risk neutral insurance company exists to provide vacation insurance. Suppose further that each vacation day requires a constant expenditure, and this expenditure is standard across everybody. This allows us to simplify the problem by considering all payments to be in terms of vacation days. What is the least the insurance
company would charge (in terms of vacation days)? a. 3 b. 4 c. 5 d. 6