One effect of a minimum wage in the market for low-skilled labor is
A. no effect in the market for low-skilled labor.
B. an increase in demand for low-skilled labor.
C. a surplus of low-skilled labor.
D. a shortage of low-skilled labor.
Answer: C
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A firm has $200 million in total revenue and explicit costs of $190 million. Suppose its owners have invested $100 million in the company at an opportunity cost of 10 percent interest rate per year. The firm's economic profit is:
a. $400 million. b. $100 million. c. $80 million. d. zero.
All of the following are criticisms of the Lorenz curve EXCEPT
A) The Lorenz curve does not include in-kind transfers. B) The Lorenz curve does not account for age differences. C) The Lorenz curve does not account for differences in the sizes of families. D) The Lorenz curve does not account for differences in education levels.
If nominal GDP increases by 2 percent and the price level drops by 1 percent, real GDP:
A. increases by 3 percent. B. increases by 1 percent. C. decreases by 1 percent. D. decreases by 3 percent.
The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.