The substitution effect of a real wage increase is observed when
A) the higher wage causes workers to take more leisure and work more hours.
B) the higher wage causes workers to take more leisure and work fewer hours.
C) leisure's higher opportunity cost causes workers to take less leisure and work more hours.
D) leisure's higher opportunity cost causes workers to take more leisure and work fewer hours.
C
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We cannot predict the effect on the equilibrium quantity, but know that the market clearing price will increase when
A) supply decreases and at the same time demand increases. B) supply increases and demand increases simultaneously. C) supply and demand decreases simultaneously. D) supply and demand increases simultaneously.
Using marginal analysis, an economist would judge the proper size of government by comparing
A. whether the last dollar spent on one program would have been better spent on another. B. whether the last dollar spent would have been better left in private hands. C. the amount spent with the amount spent in the previous year. D. whether the last dollar spent garnered any value to society.