practice02 - A Suppose that Stacys hourly wage increases...

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% ¨ ±² ± D ı T ² (±²) ²±³³.±´.³µ( l ) ü > J ± " T ² , ± s " J, 6~_ ¿ ³y>´ ~ U µ ˝ ³ µ¶– ± ˚ ² ³ ´l ± ´ ‹, j ´ l ± ² ˇ ± (¶±%): ± ± ³¸ , ´ s z p , ·².8 L ³. Suppose that Stacy’s hourly wage increases, and she decides to work fewer hours. For her, the substitution e·ect of the wage change is (a) only partially o·set by the income e·ect. (b) more than o·set by the income e·ect. (c) exactly o·set by the income e·ect. (d) We do not have enough information with which to answer the question. ². Which of the following is a plausible explanation for a ¸rm paying above-equilibrium wages to its workers? (a) It increases the probability that a worker who shirks will be caught. (b) It discourages workers from shirking out of fear of losing their high-paying job. (c) ¹e Condorcet Paradox suggests that paying high wages will result in greater e·ort by em- ployees. (d) By paying a high wage, employers solve this adverse selection problem and motivate the employees to work harder.
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practice02 - A Suppose that Stacys hourly wage increases...

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