A decrease in quantity and price is consistent with a:
A. leftward shift in supply keeping demand constant.
B. rightward shift in demand and a leftward shift in supply.
C. leftward shift in demand keeping supply constant.
D. rightward shift in supply and demand.
Answer: C
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An example of a real flow in the circular flow diagram is
A) a household's supply of work effort at its new business. B) Nike's payment of wages to workers in China. C) your county's collection of property taxes. D) the government's payment of wages to a soldier. E) a teacher's salary at the local high school.
The combined effect (both income and substitution) of a wage increase is that
A) if the substitution effect outweighs the income effect, the labor supply curve slopes upward, but if the income effect outweighs the substitution effect, the labor supply curve is backward bending. B) the income effect always dominates, leading to less work at a higher wage. C) if the substitution effect outweighs the income effect, the labor supply curve is backward bending, but if the income effect outweighs the substitution effect, the labor supply curve slopes upward. D) the substitution effect always dominates, leading to more work at a higher wage.