Question

27. If consumers' income increases by one dollar and consumers consume both food and non-food, a. spending on food consumption will always increase. b. spending on food consumption will increase but by less than one dollar if both food and non- food are normal goods. c. spending on food consumption will increase only if non-food is inferior good. d. spending on food consumption will increase only if non-food is normal good. 28. A reduction in the price of good A reduces the consumption of good B, then A and B are substitutes а. b. A and B are complements. A is a normal good. c. d. A is an inferior good. 29. When consumers receive distributions of free rice, the quantities of rice they consume are likely to and by the quantity of rice received in the distribution a. rise; more than b. rise; the same amount as rise, less than c. d. the quantities of rise they consume are not going to change 30. When labor suppliers choose how much time to allocate to wage labor and to other activities seeking to maximize utility, their constraint is given by (S time working, H - home time, T- total time endowment, C Consumption, w Wage, M = non-labor income) a. the time constraint S + H s T the cash constraint that C < wS + M. b. c. C+wH SWTM. d. all of the above. 31. If one worker suppliers more hours of labor when wage increases, we can conclude that a. the substitution effect is greater than the income effect b. the income effect is greater than the substitution effect the income effect is the same as the substitution effect c. d. this worker is not efficient 32. An increase in the price of output produced will the VMPL schedule and will lead to _in the quantity of low-skill labor demanded. shift up; an increase a. b. shift up; a decrease shift down; an increase c. d. shift down; a decrease

Answer 1

27. Ans - B)

28. ANs - A) A and B are substitutes.

29. ANs - C)

30. Ans - D) All of the above