Demand decreases from D2 to D1. b. Demand increases from D1 to D2. c. Supply inc

Question

Demand decreases from D2 to D1.

b.

Demand increases from D1 to D2.

c.

Supply increases from S1 to S2.

d.

Supply decreases from S2 to S1.

2. For a worker, the opportunity cost of an hour of leisure:

is the same for a corporate chief executive officer as it is for a garbage-collection worker.

falls by $5 when her wage rises by $5 per hour.

is determined by factors that are unrelated to her hourly wage.

rises by $5 when her wage rises by $5 per hour.

a.

is the same for a corporate chief executive officer as it is for a garbage-collection worker.

b.

falls by $5 when her wage rises by $5 per hour.

c.

is determined by factors that are unrelated to her hourly wage.

d.

rises by $5 when her wage rises by $5 per hour.

The graph below illustrates the market for bakers who make homemade breads and breakfast pastries. ? wage S1 S2 D1 D2 , Quantit If the price of breakfast pastries falls, what happens in the market for bakers?

Explanation / Answer

Ans1) the correct option is a.Demand decreases from D2 to D1. Since the price for pastries fall so the firm will make less pastries which leads to decrease in demand for labor who make pastries so demand decreases meaning demand shifts to the left.

Ans2) The correct option is d. rises by $5 when her wage rises by $5 per hour. opportunity cost is the most desirable alternative given up as the result of a decision

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