Technological efficiency is A) a necessary and sufficient condition for profit maximization. B) a sufficient but not necessary condition for profit maximization. C) a necessary but not sufficient condition for profit maximization. D) a theoretical construct with little connection to the real world. ANSWER C
Date: September 9th, 2020
Efficient production occurs if a firm A) cannot produce its current level of output with fewer inputs. B) given the quantity of inputs, cannot produce more output. C) maximizes profit. D) All of the above. ANSWER D
Date: September 9th, 2020
Suppose a person’s utility for leisure (L) and consumption (Y) can be expressed as U = Y L and this person has no non-labor income. Assuming a wage rate of $10 per hour, show what happens to the person’s labor supply when the person wins a lottery prize of $100 per day. What will […]
Date: September 9th, 2020
A tax cut that raises the after-tax wage rate will most likely result in more hours worked if A) tax rates were low already. B) the relevant portion of the labor supply curve is upward sloping. C) the relevant portion of the labor supply curve is downward sloping. D) workers can be easily fooled. […]
Date: September 9th, 2020
The nominal price of a desk increased from $20 in 2005 to $65 in 2016. The Consumer Price Index (CPI) was 125 in 2005 and 250 in 2016. We can say that A) the real price of a desk increased over time. B) the real price of a desk fell over time. C) the real […]
Date: September 9th, 2020
Empirical studies have found that the labor supply curves for most parts of the population are A) backward-bending. B) upward-sloping. C) downward-sloping. D) nearly vertical. ANSWER D
Date: September 9th, 2020
The price of leisure A) is the same for everyone. B) depends on the number of hours worked. C) is measured as foregone earnings. D) is immeasurable. ANSWER C
Date: September 9th, 2020
Wealthy people will tend to have vertical labor supply curves A) only if their income effect just offsets their substitution effect. B) only if their income effect is greater than their substitution effect. C) only if their income effect is less than their substitution effect. D) only if they don’t have an income effect. […]
Date: September 9th, 2020
The real wage in Fantasyland has been constant since 1950. The nominal wage in 2015 was $100, and the Consumer Price Index (CPI) was 200 in 2015. What was the nominal wage in 2002 if the CPI was 50 in 2002? A) Nominal wage = $25 B) Nominal wage = $400 C) Nominal wage = […]
Date: September 9th, 2020
Consider two lottery winners, Tino who is 65 years old and Sasha who is 32 years old. Which of these two would be expected to have the larger income effect, all else equal? A) Sasha B) Tino C) Both would have no income effect. D) Both would have equal income effects. ANSWER B
Date: September 9th, 2020
