Answer the following statement(s) true (T) or false (F)
1. A worker will not supply any labor when the wage rate is less than the marginal value of leisure.
2. The substitution and income effects of a wage increase both cause consumption to rise.
3. An individual's labor supply can become backward bending because high wages tend to magnify substitution effects.
4. A worker's labor supply may either rise or fall when nonlabor income increases, depending on whether the substitution effect or the income effect dominates.
5. A worker's labor supply curve is upward sloping only if the substitution and labor income effects are in the same direction.
1. False
2. True
3. False
4. False
5. False
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Explain Paul Romer's ideas concerning economic growth
What will be an ideal response?
If the price of salt increases and the quantity demanded does not change, then
A) the price elasticity of demand is equal to zero. B) demand is perfectly inelastic. C) the demand curve for salt is horizontal. D) Both answers A and B are correct.
If average cost is decreasing,
A) marginal cost equals average cost. B) marginal cost exceeds average cost. C) marginal cost is less than average cost. D) Not enough information is provided.
According to the Keynesian view, which of the following would most likely stimulate real output if an economy were in a recession?
a. a decrease in tax rates b. an increase in tax rates c. a reduction in government expenditures d. a budget surplus