The substitution effect of a wage increase is observed when
A) leisure's higher opportunity cost causes workers to take more leisure and work less.
B) leisure's higher opportunity cost causes workers to take less leisure and work more.
C) the higher wage income causes workers to take more leisure and work more.
D) the higher wage income causes workers to take more leisure and work less.
B
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When a firm maximizes its profit, which of the following is correct for firms in monopolistic competition and perfect competition?
A) P = MC for both types of firms. B) P = MR = MC for firms in perfect competition and P > MR = MC for firms in monopolistic competition. C) MR = MC for firms in perfect competition and MR > MC for firms in monopolistic competition. D) P > MR = MC for firms in both perfect competition and monopolistic competition. E) P = ATC always for firms in both perfect competition and monopolistic competition.
Points inside a production possibilities curve are ________ and ________
A) efficient; unattainable B) inefficient; unattainable C) efficient; attainable D) inefficient; attainable