The hourly wage rate is the opportunity cost of one hour of leisure because
A) the person's substitution effect exceeds his or her income effect.
B) that is what a person gives up to enjoy the hour of leisure time.
C) the person must work for a living.
D) the person prefers leisure to work regardless of the wage.
B
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Which of the following is a fundamental characteristic of the market system?
A. Property rights. B. Central planning by government. C. Unselfish behavior. D. Government-set wages and prices.
The marginal rate of substitution is the
A) rate at which the consumer can exchange one good for the other. B) change in the quantity of one good that just offsets a one-unit change in the consumption of another good such that the total satisfaction remains constant. C) change in the quantity of one good that changes the utility received by one unit. D) same thing as the marginal utility of a good.