Comment on the following statement: "The output effect and the factor substitution effectwork in opposite directions, so it is possible that a decrease in the wage rate can lead to a decrease in the amount of labor hired."
What will be an ideal response?
The statement is false. The output effect and the factor substitution effect work in the same direction. In either case, a drop in wage will lead to an increase in the amount of labor hired.
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If the state enacts the emission charge, find the associated cost savings to the firm, assuming the use of the old technology.
Consider the following abatement cost functions (TACO andMACO) for a firm using an old abatement (AO) technology: TACO = 1000 + 0.25(AO)2 MACO = 0.5(AO), where A isunits of abatement undertaken by the firm, and the cost values are in thousands of dollars. Further assume that the regulatory authority has set an abatement standard (AST) equal to 40 units for each firm and has proposed an emission charge implemented as a constant per unit tax (t) of $10 (i.e., MT = 10), where Total Tax = t(AST – Ai), and Ai is the existing abatement level.
A recent college graduate who is looking for her first job would be considered _____
a. a discouraged worker b. underemployed c. overemployed d. unemployed e. not in the labor force
Of the following, which is true of the relationship between the quantity of a good supplied and its price?
a. As price increases, the quantity supplied usually decreases. b. As price increases, the quantity supplied usually increases. c. As price increases, supply increases. d. When demand increases, so will supply. e. They always meet at the point of equilibrium in the market.
You are the Minister of Trade for a small island country with the following annual PPC:
You are negotiating a trade agreement with a neighboring island with the following annual PPC: 
If you offer to give the other island 1 coconut for every 4 fish they give you, then they will:
A. refuse your offer because they have a comparative advantage in fish. B. accept your offer because their opportunity cost of a coconut is greater than 4 fish. C. accept your offer because your opportunity cost of a coconuts is less than 4 fish. D. refuse your offer because they can produce as many coconuts as you can.