Assuming that leisure is a normal good, if an individual's labor supply curve is upward sloping, then the
A. substitution effect outweighs the income effect at higher wages.
B. income effect outweighs the substitution effect at higher wages.
C. income effect and the substitution effects are equal.
D. income effect is zero.
Answer: A
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If a firm decreases its capital stock, real wages will likely ________ and the equilibrium quantity of labor will likely ________
A) decrease; increase B) increase; increase C) decrease; decrease D) increase; decrease
One of the problems with Lewis' concept of surplus labor is that
a. People who look like they are not working actually are achieving important development objectives. b. Productivity in subsistence agriculture is so low that all workers are constantly needed. c. Those no longer needed in agriculture have long ago left for the cities. d. Those whose labor is not needed at one time may be needed at other times. e. Surplus labor exists only in developed country agriculture.
An example of the political business cycle in action came during the ________
A) Roosevelt administration of the 1920s B) Nixon administration of the 1970s C) Reagan administration of the 1980s D) Bush administration of the 2000s
Based on the theory of comparative advantage, nations maximize their well-being when they
A) create more jobs. B) allocate resources more efficiently. C) increase trade surpluses. D) increase exports.