Question

1.The supply curve for labor:

2.What name is given to goods where the quantity demanded rises as income rises?

3.When quantity demanded decreases in response to a change in price for the good:

4.Any given demand or supply curve is based on the ceteris paribus assumption that:

5. The PPF was used in class to demonstrate which of the following concepts?

6. What is meant by law of diminishing returns?

7. DeAaron went to Kentucky. While there, one day he looked at all of his options, and in the end he debated between spending the next hour playing basketball or studying. He chose to play basketball. His opportunity cost was:

Answer 1

1. The supply curve of labor is backward bending. This is because after a certain threshold, as the wages rise, people substitute their work with leisure thus, changing the shape of supply curve for labor.

2. Normal goods are the goods whose quantity demanded rises as income rises.

3. When quantity demanded decreases in response to a change in price for the good the good is substituted for other goods and the elasticity of the demand changes as well.

4. Any given demand or supply curve is based on the ceteris paribus assumption that all else is held constant.

5. PPF shows various combinations of two goods that can be produced with the given resources and technology.

6. The law of diminishing returns states that as one input variable is increased, there reaches a point where the marginal increase in the output begins to fall.

7. The opportunity cost from playing basketball was the utility he would derive from studying.