Microeconomics

If workers are in the backward-bending section of their labor supply c

If workers are in the backward-bending section of their labor supply curves, than an increase in the income tax rate will A) increase the tax revenue and increase the number of hours worked. B) increase the tax revenue and decrease the number of hours worked. C) decrease the tax revenue and increase the number of […]

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Date: September 9th, 2020

Before an uneven rise in prices Allan consumed 5 bread and 6 juice. Af

Before an uneven rise in prices Allan consumed 5 bread and 6 juice. After the price increase and with an increased welfare payment from the government Allan consumes 4 bread and 7 juice. Does the government payment represent a true cost-of-living adjustment (COLA)? A) Yes, if the two consumption bundles lie on the same indifference […]

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Date: September 9th, 2020

If the Engel curve for a good is upward sloping, the demand curve for

If the Engel curve for a good is upward sloping, the demand curve for that good must be downward sloping. Indicate whether the statement is true or false   ANSWER True . If the Engel curve is upward sloping, the good is normal. As a result, the income effect will reinforce the substitution effect and […]

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Date: September 9th, 2020

A true cost-of-living adjustment (COLA) in response to a change in pri

A true cost-of-living adjustment (COLA) in response to a change in prices would compensate consumers so that they would be able to A) purchase the same bundle they purchased before prices changed. B) achieve the same level of utility they did before prices changed. C) face the same choices they did before prices changed. D) […]

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Date: September 9th, 2020

If a consumer is compensated for the income effect that occurs when th

If a consumer is compensated for the income effect that occurs when the price of a good increases, then his demand curves can never slope upward. Indicate whether the statement is true or false   ANSWER True . The demand curve would only include the substitution effect. Even for Giffen goods, dq/dp is negative holding […]

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Date: September 9th, 2020