Answer the following statement true (T) or false (F)
1) Elasticity of resource demand is measured by dividing "percentage change in resource price"
by "percentage change in resource quantity."
2) An increase in the price of capital will reduce the demand for labor if capital and labor are
complementary resources.
3) The marginal productivity theory of income distribution holds that all resources are paid
according to their marginal contribution to society's output.
4) The marginal productivity theory of income distribution holds that all resources are paid
according to their marginal contribution to society's output.
1) F
2) T
3) T
4) F
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An increase in the real interest rate is an example of a
A) pure substitution effect. B) substitution effect and a positive income effect. C) substitution effect and a negative income effect. D) substitution effect and an income effect whose sign depends on whether the consumer is initially a borrower or a lender.
The efficient quantity of a public good occurs when the marginal cost of providing that good equals the sum of the marginal benefits to all individuals
What will be an ideal response?