Recently the price of lentil beans increased. As a result Lincoln residents noticed that their neighbor, Rasputin, increased his consumption of lentils and decreased his consumption of steak. Rasputin said his utility had declined. Many citizens made donations to the "Rasputin Relief Fund." Rasputin was given a cash grant equal to the amount he claimed to need to regain his initial utility level. Happy and thankful, Rasputin rushed off to the store to make his new purchases. Each graph above shows two indifference curves for Rasputin, I1 and I2, and the two budget constraints, B1 and B2, that he faced. Let E1 represent Rasputin's initial equilibrium, E2 equal his equilibrium following the increase in the price of lentils, E3 his equilibrium after receiving the cash from the relief fund. Wh

What are the short-run economic effects when U.S. firms substitute labor outside of the U.S. for labor inside the U.S.?

A) The demand curve for labor in the U.S. decreases, and the demand curve in the foreign country will increase. B) The demand curve for labor in the U.S. increases, and the demand curve in the foreign country will decrease. C) The demand curve for labor in the U.S. decreases, and the demand curve in the foreign country will decrease. D) The demand curve for labor in the U.S. increases, and the demand curve in the foreign country will increase.

An example of moral hazard is

a. A taxi driver paid per mile taking a longer route than necessary b. a piece-rate garment worker shirking more than a per jour worker c. an hourly salesman working harder than a commission salesman d. an author on contract going to as many book signings as one with a percentage royalty rate