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 2Assume 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 3Use 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 4Which 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 5When 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 6The 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
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