Homework4 - Econ 2005 Principles of Microeconomics Dr Gebre...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
Econ 2005: Principles of Microeconomics Dr. Gebre Gebremariam Spring 2008 Homework 4 Due Date, 29 February 2008, at the end of class Choose the one alternative that best completes the statement or answers the question and blacken the circle that corresponds to your answer in the answer sheet (Scantron) separately provided. Refer to the information provided in Figure 6.5 below to answer the questions that follow. Figure 6.5 1) Refer to Figure 6.5. Molly's budget constraint is BD . If the price of CDs decreases, her new budget constraint becomes A) AO . B) AD . C) EF . D) CD . 2) Assume leisure is an inferior good instead of a normal good. The income effect of a wage increase will lead to a ________ demand for leisure and a ________ labor supply. A) higher; higher B) higher; lower C) lower; lower D) lower; higher 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Refer to the information provided in Figure 6.11 below to answer the question that follows. Figure 6.11 3) Refer to Figure 6.11. Gordon's opportunity cost of one hour of leisure is A) $24. B) $240. C) $10. D) indeterminate from this information. 4) Assume leisure is a normal good. The substitution effect of a wage decrease implies a ________ demand for leisure and a ________ labor supply. A) lower; lower B) higher; higher C) lower; higher D) higher; lower 5) If the substitution effect of a wage change outweighs the income effect of a wage change, the labor-supply curve is A) vertical. B) upward sloping. C) backward bending. D) horizontal. 6) Assuming that leisure is a normal good, if an individual's labor supply curve is backward bending, then the A) income effect outweighs the substitution effect at higher wages. B) income effect is zero. C) income effect and the substitution effects are equal. D) substitution effect outweighs the income effect at higher wages. 2
Background image of page 2
Refer to the information provided in Figure 6.1 below to answer the questions that follow. Figure 6.1 7) Refer to Figure 6.1. Assume Tom is on budget constraint AC and the price of a hot dog is $2.00. Tom's monthly income is A) $60. B) $40. C) $80. D) $100. Refer to the information provided in Figure 6.5 below to answer the questions that follow. Figure 6.5 8) Refer to Figure 6.5. Molly's budget constraint is CD . If her income increases, her new budget constraint is A) EF . B) AD. C) BD . D) not shown on this graph. 3
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Refer to the information provided in Figure 6.7 below to answer the questions that follow. Figure 6.7 9) Refer to Figure 6.7. Along budget constraint AB , the price of good X is $10 and the price of good Y is $12. If the price of X increases to $15, the budget constraint will A) pivot in at point A . B) pivot out at point A . C) shift in parallel to AB . D) pivot in at point B . Refer to the information provided in Figure 6.1 below to answer the questions that follow.
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 20

Homework4 - Econ 2005 Principles of Microeconomics Dr Gebre...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online