Fill in the blanks. For a normal good, the income effect is _________, and the substitution effect is _______.
a. positive; positive
b. positive; negative
c. negative; positive
d. negative; negative
d. negative; negative
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What is a marginal cost?
What will be an ideal response?
An increase in demand accompanied by a simultaneous decrease in supply will have what effect on equilibrium?
a. Price will either rise or fall; quantity will fall. b. Price will rise; quantity will fall. c. Price will rise; quantity will either rise or fall. d. Price will either rise or fall; quantity will rise. e. Price will fall; quantity will either rise or fall.
When leisure is a normal good, the income effect from a decrease in wages is evident in
a. a desire to consume more leisure. b. a desire to consume less leisure. c. an upward-sloping labor-supply curve. d. a shift in labor demand.
Saying a firm will continue investing up to the point at which ________ is equivalent to saying that a firm will keep investing in new capital up to the point where the expected rate of return is equal to the interest rate.
A. the return on capital is equal to depreciation B. the marginal revenue product of capital is equal to its rental cost C. the interest rate is equal to the inflation rate D. the marginal product of capital is equal to the marginal product of labor