In a competitive labor market, a monopoly will tend to hire less labor than will a
competitive firm.
The income and substitution effect always go in opposite directions.
A temporary increase in the supply of current goods will be reflected in higher interest
rates today.
The Pareto criterion is a criterion under which any proposal that can be unanimously
defeated should be rejected.
In the principal-agent problem, the principal is the person performing work and the
agent is the one for whom the work is being done.
In a Clarke tax scheme, the amount of tax that a person pays depends, in part, on his
revealed preference for the public good.
Consider the following:
(i) Can a good have both a downward-sloping Engel curve and a downward-sloping
demand curve? Why or why not?
(ii) Can a good have both an upward-sloping Engel curve and an upward-sloping
demand curve? Why or why not?
When people have identical tastes, the rents created by a common property are totally
dissipated.
If water can be bottled at zero marginal cost, and if water prices are growing slower
than the rate of interest, then owners would benefit by increasing their current bottling
operations.
A draft is better for society because it is less costly than a volunteer army.
A decrease in firms’ variable costs will cause the output of the market to decrease.
Firms have an incentive to practice planned obsolescence, because it increases their
volume of sales and gives them higher profits.
An individual’s indifference curves between labor and consumption are upward sloping
because both are desired.
A rule which makes someone imposing costs on others liable for those costs is
equivalent to a Pigovian tax in which the revenues are given to the injured party.
Changes in property rights will not affect the allocation of resources as long as
transactions costs are zero and the subsequent effects on market demand are negligible.
If marginal costs are significant, then the price of an exhaustible resource grows at the
rate of interest.
Assume glassware is produced by firms in a competitive industry, one of which is
Gregor’s Glassworks.
A worker’s labor supply curve is upward sloping only if the substitution and labor
income effects are in the same direction.
Patents have ambiguous welfare consequences because they both create monopoly
power and promote inventive activity.
If all absolute prices increase by 10%, then the economy’s relative prices will remain
unchanged.