The labor supply curve bends backward because
A. income effects are greater than substitution effects at higher wages.
B. substitution effects are greater than income effects at higher wages.
C. income effects are greater than substitution effects at lower wages.
D. substitution effects are greater than income effects at lower wages.
Answer: A
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The Brooks Appliance Store and the Lefingwell Appliance Store (both are located in the same city) each sell an identical washer-dryer pair. The owner of each store considered offering the washer-dryer pair for $700, but decided on a price of $500
If this is a Nash equilibrium we can conclude that A) the owners of the stores feared that charging $700 could be used as evidence of collusion. B) charging $500 was the most profitable strategy for each store, regardless of what price was charged by the other store. C) the stores were less concerned about making a profit from the washer-dryer pair than they were with attracting customers who would also buy other appliances. D) each store owner feared charging the higher price would result in being undercut by the other store charging the lower price.
Marginal propensity to save is equal to the change in ____ divided by the change in ____
a. consumption spending; total income b. saving; total income c. saving; disposable income d. consumption spending; disposable income
Before World War II, the average level of prices in the United States usually
A. fell during wartime and fell during peacetime. B. rose during wartime and rose during peacetime. C. fell during wartime and rose during peacetime. D. rose during wartime and fell during peacetime.
Holding the velocity of money constant, according to the equation of exchange, a 10 percent increase in the money supply could possibly cause which of the following?
A. A 5 percent decrease in the price level. B. A 10 percent decrease in the quantity of output. C. A 5 percent increase in the quantity of output. D. A 10 percent increase in the price level.