A Lorenz curve is a geometric representation of the:
A. behavior of income over time.
B. level of income earned by a given family in a given country at a given time.
C. behavior of income across countries.
D. share distribution of income among families in a given country at a given time.
Answer: D
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Answer the following statement(s) true (T) or false (F)
1. When an increase in marginal productivity increases workers' nonlabor income, the effect on the quantity of labor supplied is ambiguous. 2. A permanent increase in workers' marginal productivity causes employment to rise by more than if the increase were temporary. 3. A technological improvement that is permanent is more likely to raise employment than one that is temporary. 4. Education is partly investment but also partly consumption. 5. All other things being equal, firms that provide on-the-job training to workers will tend to pay higher wages.
Assume that a restaurant is hiring labor in an amount such that the MRC of the last worker is $16 and her MRP is $12. Based on this information, we can say that
A. profits will be increased by hiring additional workers. B. profits will be increased by hiring fewer workers. C. the restaurant is maximizing profits. D. marginal revenue product must exceed average revenue product.
Answer the following statement(s) true (T) or false (F)
1. Although a sales tax hurts both producers and consumers, their losses are fully offset by the benefits created by the tax revenues. 2. One effect of a tax is that output in the market which is taxed falls. 3. Even if total surplus is maximized, there is still a chance that there will be a deadweight loss. 4. When the Pareto criterion is used to choose between different policies, any recommendation requires unanimous agreement. 5. If the potential Pareto criterion rejects a policy change, then the efficiency criterion will reject it as well.
Moving up (to the left) along a linear demand curve, the price elasticity of demand
A) decreases. B) does not change. C) increases. D) at first increases and then decreases.