The income effect describes the:
A. decrease in the quantity of labor supplied in response to a lower wage.
B. increase in the quantity of labor supplied in response to a higher wage.
C. increase in the quantity of labor supplied due to the greater demand for leisure caused by a higher income.
D. decrease in the quantity of labor supplied due to the greater demand for leisure caused by a higher income.
Answer: D
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A financial intermediary that sells shares in itself to the public, and then uses the funds to buy a wide variety of financial assets is called a:
A. commercial bank. B. mutual fund. C. stock exchange. D. credit union.
If a society only cares about efficiency and not equity, then
A) all points on the contract curve yield the same level of social welfare. B) it will not rely on competitive markets to allocate goods. C) it will maximize the utility of its worst-off member. D) an equitable outcome is impossible.
The monopolist will maximize profits at the output level for which:
A. marginal revenue equals marginal cost. B. price equals average total cost. C. marginal revenue equals average total cost. D. price equals marginal cost.
Which panel of Figure 3.3 represents the changes in the market for cigarettes when the government increases subsidies for the production of tobacco and at the same time bans smoking in public buildings?
A. A. B. B. C. C. D. D.