An example of an underemployed resource is a(n)
a. farmer in Illinois who plants corn instead of wheat
b. auto mechanic who is laid off from his job
c. welfare recipient who doesn't work
d. retired senior citizen who doesn't work
e. person with a Ph.D. in chemistry who drives a taxi as a full-time job
E
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The costs of inflation that arise from trying to reduce cash holdings are known as
A) diminishing costs. B) menu costs. C) chain-index costs. D) shoe leather costs.
In order to hire an additional worker, a monopsony must pay
A) a higher wage rate than it paid before. B) the same wage rate it paid before. C) a lower wage rate than it paid before. D) a wage rate that is sometimes higher, sometimes lower, and sometimes the same as before, depending on the elasticity of the supply of labor.
The idea that the business cycle is recurrent means that
A) declines in economic activity tend to be followed by further declines, and growth in economic activity tends to be followed by more growth. B) the standard pattern of contraction—trough—expansion—peak occurs again and again in industrial economies. C) many economic variables to move together in a predictable way over the business cycle. D) peaks and troughs of the business cycle occur at regular intervals.
Suppose a consumer is spending all of his/her income on two goods, A and B, in a manner where MUa = 15 and MUb = 80, and the Pa = $5 and the Pb = $20 . Then the consumer:
a. is maximizing his/her utility. b. should increase his/her purchases of B and decrease the purchases of A. c. should spend more money on both goods. d. should spend less money on both goods. e. should increase the purchases of A and decrease the purchases of B.