Labor supply
A) must necessarily increase when the real wage increases.
B) increases if the substitution effect exceeds the income effect.
C) is increasing and then decreasing in the real wage.
D) increases when taxes increase.
B
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When a profit-maximizing firm in a competitive price-searcher market is in long-run equilibrium, price equals
a. marginal cost, and profits are positive. b. average total cost, and profits are zero. c. marginal cost, and profits are zero. d. average total cost, and profits are positive.
In the figure below, AB is the production-possibility curve of Canada. I1 and I2 are two of the community indifference curves of Canada. With free trade, the international price ratio is 0.25 bushel of wheat/bale of cotton, and Canada will import:
A. eighty bushels of wheat. B. twenty bushels of wheat. C. forty bales of cotton. D. sixty bales of cotton.