Refer to Figure 17-3. Assume Panel B represents the labor supply curve. Which of the following statements about Panel B is true?
A) Panel B describes a situation in which the income effect dominates the substitution effect at every level of wages (segments i, ii, and iii).
B) Panel B describes a situation in which the income effect dominates the substitution effect at low wages (segment i) and a situation in which the substitution effect dominates the income effect at very high wages (segment iii).
C) Panel B describes a situation in which the income effect dominates the substitution effect at low wages (segment i) and again at very high wages (segment iii).
D) Panel B describes a situation in which the substitution effect dominates the income effect at low wages (segment i).
C
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??Exhibit 16A-2 Macro AD/AS Models
?
?As shown in Panel (b) of Exhibit 16A-2, assume the economy adopts a classical nonintervention policy. Which of the following would cause the economy to self-correct?
A. ?Competition among firms for workers increases the nominal wage and SRAS shifts rightward. B. ?Long-run equilibrium will be established at Y1 and P2. C. ?Long-run equilibrium will be established at Yp and P3. D. ?Competition among unemployed workers decreases nominal wages and SRAS shifts rightward.
Firms ________ in monopolistic competition due to product differentiation.
A. have blocked entry B. are limited in number C. gain control over price D. have no control over price
Given the indifference curve and budget line below, this individual:
A. Prefers B to A, but B costs more
B. Prefers B to A, and they cost the same
C. Is indifferent between A and B, but A costs less
D. Is indifferent between A and B, and they cost the same
In events leading to the collapse of the housing bubble, inflated home values caused consumers to:
A. save less and spend more. B. spend less and save more. C. spend more on homes and less on all other goods. D. hold their savings to equity in their homes and stop saving more liquid forms of assets.