If the consumer is willing to give up 3 units of food (vertical axis) in exchange for one unit of shelter (horizontal axis) and food is priced at 10 and shelter at 20, then the consumer is purchasing
A. just the right amount of each good for utility maximization.
B. too much food for utility maximization.
C. less than the budget would allow.
D. too much shelter for utility maximization.
Answer: B
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The substitution effect of a wage decrease in the work-leisure model results in the worker choosing to
a. work less than before. b. work more than before. c. possibly work more or less than before. d. work more with a higher level of consumption.
When the Japanese imposed a voluntary export restraint (VER) on automobile exports in the 1980s, the environmental conditions in the United States improved.
Answer the following statement true (T) or false (F)
Because the aggregate supply curve rises more steeply as the economy approaches full employment,
A. The recessionary GDP gap becomes larger. B. Aggregate demand shifts to the left. C. It becomes easier to reach full employment. D. Inflation tends to accelerate.
In the marginal productivity theory of income distribution, when all markets are purely competitive, the payment for each unit of a resource is equal to its:
A. Total product B. Marginal product C. Marginal revenue product D. Total revenue product