1a. Determine the false statement A) Unemployment is equivalent to excess labor

Question

1a. Determine the false statement

A) Unemployment is equivalent to excess labor demand.

B) A rightward shift of the supply may decrease a shortage.

C) A rightward shift of the demand may decrease a surplus.

D) Shifting both the supply and demand curves may reduce the surplus.

1b. The current market for good X is in surplus. The resulting excess supply can be removed by:

A) a policy reducing the market price.

B) a rightward shift of the supply curve.

C) a leftward shift of the demand curve.

D) A and B.

1c. What does the Marginal Utility measures?

A) The intercept of the indifference curve.

B) The slope of the budget constraint.

C) The utility increase due an increase of consuming a good

D) The marginal rate of substitution.

E) None of the above

Explanation / Answer

Answer

1.a) The correct answer is (A) Unemployment is equivalent to excess labor demand.

Unemployment is the market occurs then Labor Supply is greater than labor demand, Hence Excess labor demand does not lead to unemployment.

Hence the correct answer is (A) Unemployment is equivalent to excess labor demand.

1b.

The correct answer is A) A policy reducing the market price.

In order to reduce supply according to law of supply As price decreases supply of good decreases. Hence Excess supply can be removed by reducing market Price.

Hence The correct answer is A) A policy reducing the market price.

1c.

The most suitable answer is (C) Utility increase due to increase in consumption

Marginal utility measures change in utility when consumption increases by 1 unit.Note utility can increase can be positive or negative(decreasing Utility).

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