Refer to Scenario 17.5. Under which of the following payment schemes would workers have an incentive to exert high effort?
A) A guaranteed wage equal to $0
B) A guaranteed wage equal to $5000
C) A guaranteed wage equal to $10,000
D) A wage equal to the income earned, minus $4000
E) A wage equal to $0 if revenue is $5000, $2000 if revenue is $7000, and $8000 if revenue is $13,000
E
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One way to reduce exports is to
A) base trade on comparative advantage. B) base trade on opportunity costs. C) trade with poor countries. D) restrict imports.
If a seller can identify two groups of consumers with different demand elasticities, and can prevent arbitrage between the groups, it can increase profit by charging a higher price to the low-elasticity group.
Answer the following statement(s) true (T) or false (F)
If average productivity falls, will marginal cost necessarily rise? How about average cost?
A. If average productivity is falling, average cost must be falling; if marginal productivity is falling, marginal cost must be falling. But there is no necessary relationship between average productivity and marginal cost. B. If average productivity is falling, average cost must be rising; if marginal productivity is falling, marginal cost must be rising. But there is no necessary relationship between average productivity and marginal cost. C. If average productivity is falling, both average and marginal costs must be falling; if marginal productivity is falling, both average and marginal costs must be falling as well. In other words, saying that average productivity and marginal productivity are falling has the same repercussions for costs. D. If average productivity is falling, both average and marginal costs must be rising; if marginal productivity is falling, both average and marginal costs must be rising as well. In other words, saying that average productivity and marginal productivity are falling has the same repercussions for costs.
Differentiate between “demand-pull” and “cost-push” inflation in the basic aggregate demand and aggregate supply model.
What will be an ideal response?