Farmers often find that large bumper crops are associated with declines in their gross incomes. This suggests that:
A. farm products are normal goods.
B. farm products are inferior goods.
C. the price elasticity of demand for farm products is less than 1.
D. the price elasticity of demand for farm products is greater than 1.
Answer: C
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In the figure above, if the government starts to provide university education at no charge, in the long run, the wage rate of high-skilled workers will ________ and the wage rate of low-skilled workers will ________
A) rise; fall B) fall; rise C) fall; fall D) rise; rise
If the entrepreneur is also the manager of the firm, we would expect
A) the manager to work hard because he or she is also the residual claimant. B) the manager to not work hard since there is no possibility of further advancement. C) the firm to operate poorly because the specialization of labor is not adequate. D) the firm to operate poorly because the entrepreneur is not as good at managing workers as a professional manager would be.