Which of the following is true of a change in nonlabor income?
A. There is no income effect because a change in nonlabor income does not change a household's permanent income.
B. There is no substitution effect because a change in nonlabor income does not change a household's permanent income.
C. There is no income effect because a change in nonlabor income does not change the trade-off between work and leisure.
D. There is no substitution effect because a change in nonlabor income does not change the trade-off between work and leisure.
Answer: D
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The federal budget
A) is required to balance by law. B) can have a surplus but not a deficit. C) can have a deficit but not a surplus. D) can have a deficit or a surplus but cannot be balanced. E) can have a deficit, a surplus, or a balance.
Max has allocated $100 toward meats for his barbecue. His budget line and indifference map are shown in the above figure. If Max's current MRS = -0.8, then Max is at point
A) b. B) d. C) e. D) None of above.
If a nation has the lowest opportunity cost of producing a good, that nation has a(n) ________ in the production of that good.
A. comparative advantage B. comparative advantage and an absolute advantage C. absolute advantage D. absolute advantage and possibly a comparative advantage
If you advertise and your rival advertises, you each will earn $4 million in profits. If neither of you advertises, you will each earn $10 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn $1 million and the non-advertising firm will earn $5 million. Which of the following is true?
A. A dominant strategy for firm A is to advertise. B. A Nash equilibrium is for both firms to advertise. C. A dominant strategy for firm B is to advertise. D. None of the answers is correct.