A budget constraint represents the:
A) inequality in the incomes earned by various economic agents.
B) aggregate income earned by all the firms in an economy.
C) total money income that an agent earns in different time periods.
D) goods and services an economic agent can choose given her limited income.
D
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Consider a firm that is trying to determine how many hours to remain open in a day. How would the firm make this decision?
What will be an ideal response?
The chapter shows that as a general rule people with more education earn higher salaries. Economists have offered two explanations of this relationship
The human capital argument says that high schools and colleges teach people valuable skills and employers are willing to pay higher salaries to attract people with those skills. The signaling argument says that college graduates earn more because a college degree is a signal to employers that a job applicant is diligent, intelligent, and persevering. How might you use data on people with two, three, and four years of college education to shed light on this controversy?