In the above figure, if D2 is the original demand curve and the population falls, which price and quantity might result?
A) point a, with price P2 and quantity Q2
B) point b, with price P1 and quantity Q1
C) point c, with price P3 and quantity Q3
D) point d, with price P1 and quantity Q3
B
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The substitution effect of a change in wage rate on a firm's demand for labor input will be more significant:
a. the greater the change in output. b. the more sharply curved are the firm's isoquants. c. the flatter are the firm's isoquants. d. the larger the quantity of labor employed.
If an economy is producing at a point on the production possibilities curve it represents: a. full employment of existing resources. b. the gains from trade that an economy can enjoy
c. the maximum amount of two goods that can be produced with existing resources. d. decreasing opportunity costs of producing both goods. e. overutilization of existing resources.