Suppose a study showed that as the income of doctors increased, doctors spent more time on the golf course and less in the office. What would such a conclusion say about the relative sizes of substitution and income effects?
The supply curve for doctor labor hours is bending backward with respect to wage. This means the income effect (as income rises, buy more leisure) outweighs the substitution effect (as wages rise, choose more work and less leisure).
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If firms in an industry are generating knowledge that other firms can use without paying for it, this industry is characterized by
A) social costs that exceed private costs. B) social benefits that exceed private benefits. C) social costs that exceed social benefits. D) private benefits that exceed social benefits. E) social benefits that undermine private benefits.
If the Fed increases the real interest rate as a response to a decrease in the inflation rate, the ________, which results in a ________
A) MP curve shifts up; movement down the AD curve B) MP curve shifts up; movement up the AD curve C) IS curve shifts up; movement down the AD curve D) IS curve shifts up; movement up the AD curve