Biology Forums - Study Force

Which of the following is not a reason for compensating wage differentials?
 a. The risk involved in certain jobs
  b. An excess supply of workers in some industries
  c. A high probability of staying away from home
  d. To attract more laborers in risky professions
  e. Unpleasant working consditions

QUESTION 2

Assume that due to unfavorable conditions in a prime honey-producing area, the price of honey increases by 50 percent. The quantity consumed of herbal tea declines immediately by 25 percent. Everything else held constant, the:
 a. cross-price elasticity of demand for herbal tea and honey is negative, and therefore the two goods are substitutes.
  b. cross-price elasticity of demand for herbal tea and honey is negative, and therefore the two goods are complements.
  c. cross-price elasticity of demand for herbal tea and honey is positive, and therefore the two goods are substitutes.
  d. cross-price elasticity of demand for herbal tea and honey is positive, and therefore the two goods are complements.
  e. cross-price elasticity of demand cannot be determined from the information provided.

QUESTION 3

Use the law of diminishing marginal utility to explain why a pizza parlor might price pizzas in the following way: Buy one pizza for 12, get the second pizza for 6. Why not simply charge 9 per pizza instead?

QUESTION 4

Which of the following professionals is likely to receive higher compensatory wages?
 a. Financial accountants
  b. Software engineers
  c. Sales workers
  d. Share traders
  e. Tailors

QUESTION 5

When product A is a substitute for product B, the cross-price elasticity of demand for products A and B will be _____.
 a. unity
  b. negative
  c. positive
  d. decreasing
  e. increasing

QUESTION 6

The line joining the old and new optimum points following a pivotal rotation of the budget line is:
 a. the price-consumption curve.
 b. the income-consumption curve.
  c. the Engels curve.
 d. the hypothetical budget line

[Answer to ques. #1]  b

[Answer to ques. #2]  b

[Answer to ques. #3]  The second pizza gives less marginal utility than the first. The pizza parlor is trying to encourage consumers to buy the second pizza by charging a price that reflects its relatively lower marginal utility. If price is set equal to 9 per pizza, some consumers with low marginal valuations for a second pizza might elect not to purchase a second one. If enough customers elect not to purchase a second pizza at a price of 9, the pizza parlor might be worse off than when employing the buy one for 12, get the second pizza for 6 strategy.

[Answer to ques. #4]  c

[Answer to ques. #5]  c

[Answer to ques. #6]  a