As wages rise, the substitution effect induces households to
A) choose leisure rather than supplying labor in the labor market.
B) choose supplying labor in the labor market rather than engage in leisure.
C) reduce the opportunity cost of leisure.
D) reduce the economic rent from leisure.
B
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The amount of consumption expenditure that takes place when income is zero is
A) called induced consumption. B) called zero-based consumption. C) equal to zero. D) called autonomous consumption. E) equal to saving.
Kathy and Amy paint pictures and do caricatures to sell to tourists. In one day, Kathy can either paint two pictures or do four caricatures. In one day, Amy can either paint three pictures or do three caricatures
For both Kathy and Amy, what is the opportunity cost of painting one picture? Who has the comparative advantage in painting pictures and who has the comparative advantage in doing caricatures? How might they be able to increase their total output?
Bounded rationality suggests that
A) individuals might make "incorrect" decisions because they are unable to consider all possible options. B) individuals would rather have less choice to more choice. C) rational decisions can only be made when choices are restricted. D) individuals are happier when their choices are restricted or "bounded."
If the country wanted to produce the maximum total number of units of guns and butter combined, it would produce at point(s) ________________.
