Efficiency wage theory suggests that firms may hold wages ________ the market clearing rate because they believe that the productivity of workers ________ with the wage rate.
A. above; increases
B. below; increases
C. above; decreases
D. below; decreases
Answer: A
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When an economist uses the term "cost" referring to a firm, the economist refers to the
A) price of the good to the consumer. B) explicit cost of producing a good or service but not the implicit cost of producing a good or service. C) implicit cost of producing a good or service but not the explicit cost of producing a good or service. D) opportunity cost of producing a good or service, which includes both implicit and explicit cost. E) cost that can be actually verified and measured.
If higher prices cause buyers to shop at discount stores, the CPI has
A) a new goods bias. B) a quality change bias. C) a commodity substitution bias. D) an outlet substitution bias. E) a discounted bias.
What effect will an increased demand for housing in the suburbs of a major city have on the cost of vegetable farming in the suburbs?
A) No effect, since one cannot grow vegetables on land on which housing has been constructed. B) The cost will decline because only very fertile land will now be used for growing vegetables. C) The cost will rise because it will become more expensive to grow vegetables. D) The cost won't change, because there has been no change in physical conditions. E) We cannot predict unless we know what has happened to the demand for vegetables.
A university should not disband its football team if it has already paid for the stadium
a. True b. False