In the summer of 2009, the United States federal minimum wage was raised to $7.25. According to theory, what will likely be the result of an increase in minimum wage?
A. All workers prior to the wage increase will now earn at least the minimum wage.
B. Some workers will leave the labor market.
C. Unemployment will increase as firms lay off workers.
D. Firms will hire more workers.
Answer: C
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The burden of a tax falls entirely on buyers if ________
A) the price elasticity of demand is zero (perfectly inelastic) B) the price elasticity of demand is greater than 1 C) the income elasticity of demand is high D) the price elasticity of supply is unitary elastic
Which characteristic is associated with monopolistic competition?
A) collusion B) product differentiation C) small number of firms D) awareness of rival firms in the market
If the world real interest rate falls, then a country that is an international lender
A) increases the amount of its lending. B) does not change the amount of its lending. C) decreases the amount of its lending. D) None of the above answers is correct because lending might increase, decrease, or not change.
What is the utility-maximizing rule?
What will be an ideal response?