The wealth effect points out that consumption decreases when people's real wealth decreases
Indicate whether the statement is true or false
TRUE
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Suppose that a haircut will give Dawn 2,000 units of utility and cost her $40, whereas a manicure costs $25 and yields 1,000 units of utility. Most likely Dawn should:
A. choose the haircut because she will receive 50 units of utility per dollar compared with 45 units of utility per dollar for the nails. B. be indifferent between the two choices. C. choose the haircut because each unit of utility will cost her $0.02 compared with $0.025 for the nails. D. choose the nails because she will obtain 50 units of utility per dollar compared with 40 units of utility per dollar for the haircut.
The relationship between output and employment is known as
A. the Beveridge curve. B. the Phillips curve. C. the Diamond paradox. D. Okun's Law.
How does a government typically ensure that everyone contributes to public goods?
a. Collecting taxes b. Selling bonds c. Supporting private industry d. Charging usage fees
When relatively few workers have high ability,
A) they will settle for the average wage. B) they will want to signal their ability. C) the premium for high ability is less than when most workers have high ability. D) they do not need to signal their ability.