Which of the following is true concerning the substitution effect of a decrease in price?
A) It will lead to an increase in consumption only for a normal good.
B) It always will lead to an increase in consumption.
C) It will lead to an increase in consumption only for an inferior good.
D) It will lead to an increase in consumption only for a Giffen good.
B
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Refer to Figure 8.3. Holding other variables constant, if the economy is originally in equilibrium at the intersection of D2 and S2 and households increase their preference for leisure over labor, the economy would move to the new equilibrium point
represented by A) w1 and L2. B) w3 and L2. C) w2 and L2. D) w2 and L1.
Excludable goods are those goods that a person can be prevented from consuming
a. True b. False Indicate whether the statement is true or false
Suppose it takes Paul 3 hours to bake a cake and 2 hours to mow the lawn, and suppose it takes Tom 2 hours to bake a cake and 1 hour to mow the lawn. Which of the following statements is correct?
A. Paul has the comparative advantage in mowing the lawn. B. Paul has the absolute advantage in mowing the lawn. C. Paul has the comparative advantage in baking cakes. D. Paul has the absolute advantage in baking cakes.
Earth Movers & Shakers operates 3 iron ore mines. The accompanying table shows each mine's total daily production and the current number of miners at each mine. All miners work for the same wage, and each miner in any given mine produces the same number of tons per day as every other miner in that mine. Total Tons Per DayNumber of MinersMother Lode10025Scraping Bottom3010Middle Drift7515 The opportunity cost of moving one miner from Mother Lode to another mine is:
A. 3 tons per day. B. 4 tons per day. C. 1 ton per day. D. 2 tons per day.