Recall the Application about the response of bike messengers in Zurich to a change in wages to answer the following question(s).Recall the Application. A study of bike messengers in Zurich showed that as the messengers' revenue share increased from 40% to 50%, the bike messengers took more shifts but pedaled slower. If the increase in the revenue is similar to a wage increase, then the decrease in the pedaling speed is reflective of:
A. the income effect.
B. the substitution effect.
C. neither the income nor the substitution effect.
D. both the income and the substitution effect.
Answer: A
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Comment on the following statement: "Average fixed cost falls as output rises, but average fixed cost will never be equal to zero."
What will be an ideal response?
If average cost is falling, then marginal cost must be falling.
Answer the following statement true (T) or false (F)
Refer to the accompanying figure. If this economy is currently producing at point C, then the opportunity cost of providing 100 additional units of medical care would be:
A. 400 warheads. B. 100 warheads. C. 800 warheads. D. 200 warheads.
How much is the output gap if short-run output is $18.0 trillion and potential output is $18.2 trillion?
What will be an ideal response?