Suppose the price of public transportation increases. You know that the income effect of this increase is 5, the substitution effect is 10, but you do not know the signs. The total effect of the increase in the price of public transport could be either
A. -15 or 15.
B. 15 or 5.
C. 5 or -15.
D. 5 or -5.
Answer: B
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In Figure 3-2, at point B
A. it is impossible to increase production of consumer goods. B. it is impossible to increase production of capital goods. C. it is possible to increase production of both capital goods and consumer goods simultaneously. D. it is impossible to increase production of both capital goods and consumer goods simultaneously.
A rival good is defined as a good for which there are substitutes
Indicate whether the statement is true or false
When a country moves away from a free trade position and imposes a tariff on imports, it causes
a. a decrease in total surplus in the market. b. a decrease in producer surplus in the market. c. an increase in consumer surplus in the market. d. a decrease in revenue to the government.
Typically, as a firm hires additional workers, the marginal product of labor
a. decreases, and the value of the marginal product of labor decreases. b. stays constant, and the value of the marginal product of labor decreases. c. decreases, and the value of the marginal product of labor stays constant. d. decreases, and the value of the marginal product of labor increases.