The belief that a cut in the income tax rate must raise government income tax revenue has the implicit assumption that A) higher income tax reduces the number of hours worked. B) higher income tax increases the number of hours worked. C) leisure is always an inferior good. D) None of the above. ANSWER […]
Date: September 9th, 2020
Limited liability is a benefit to A) sole proprietorships. B) partnerships. C) corporations. D) All of the above. ANSWER C
Date: September 9th, 2020
Leisure is an inferior good for Assel. In response to an increase in the wage rate, she will A) supply fewer hours of labor. B) supply more hours of labor. C) enjoy more hours of leisure. D) None of the above. ANSWER B
Date: September 9th, 2020
Using the CPI to compensate workers for inflation is appropriate because, in the face of a change in relative prices, people should be allowed to purchase the same bundle as they did before the price changes. Indicate whether the statement is true or false ANSWER False. This assumes that people would still prefer the […]
Date: September 9th, 2020
If a person supplies fewer hours of labor in response to a wage increase, then A) the substitution effect is greater than the income effect. B) the income effect is greater than the substitution effect. C) the income effect equals the substitution effect. D) the person is not maximizing utility. ANSWER B
Date: September 9th, 2020
In response to an increase in the wage rate, the substitution effect will cause a person to A) supply fewer hours of labor. B) supply more hours of labor. C) supply the same hours of labor. D) have a backward bend in her labor supply curve. ANSWER B
Date: September 9th, 2020
What might explain a professional baseball player having lower production the year after signing a multimillion dollar contract? A) the substitution effect B) the endowment effect C) bounded rationality D) the income effect ANSWER D
Date: September 9th, 2020
Inflation over time necessarily makes consumers worse off. Indicate whether the statement is true or false ANSWER False. Wages also increase over time. Workers may earn the price of some goods in less time than in the past.
Date: September 9th, 2020
A backward-bending labor supply curve implies that A) the substitution effect dominates the income effect at higher wage rates but not at lower wage rates. B) the substitution effect dominates the income effect at lower wage rates but not at higher wage rates. C) leisure is an inferior good. D) workers are irrational. ANSWER […]
Date: September 9th, 2020
If a person supplies more hours of labor in response to a wage increase, then A) the substitution effect is greater than the income effect. B) the income effect is greater than the substitution effect. C) the income effect equals the substitution effect. D) the person is not maximizing utility. ANSWER A
Date: September 9th, 2020
