If an individual's supply of labor curve is positively sloped throughout, then:
a. the substitution effect always dominates the income effect.
b. the income effect always dominates the substitution effect.
c. the substitution effect dominates at low real wage levels and the income effect dominates at high real wage levels.
d. the income effect dominates at low real wage levels and the substitution effect dominates at high real wage levels.
QUESTION 2An example of moral hazard is
a. people drive as carefully in icy conditions with antilock brakes as without
b. people drive as safely with more airbags as without
c. football players avoid 'spearing' with their heads even with safer helmets
d. people fail to read the medicine warnings more often when self-medicating versus with a doctor's prescription
QUESTION 3Which of the following is not a characteristic that makes medical care different from other commodities?
a. Demand for medical care is irregular.
b. Sellers have more information than buyers.
c. Third-party payers abound.
d. For-profit providers play a major role in delivering medical care.
e. The transaction itself if filled with uncertainty.
QUESTION 4When an individual's wage rises, the income effect tends to:
a. increase hours worked.
b. decrease hours worked.
c. leave hours worked unchanged.
d. an impossible prediction about what will happen to hours worked.
QUESTION 5An example of moral hazard is
a. people drive as carefully in icy conditions with antilock brakes as without
b. people drive as safely with more airbags as without
c. football players 'spear' with their heads when tackling more often with safer helmets
d. people read the medicine warnings as carefully when self-medicating versus with a doctor's prescription
Quick Reply
