____ 51. Discounting is the process of a. cutting prices to get rid of surplus s
ID: 1213680 • Letter: #
Question
____ 51. Discounting is the process of
a.
cutting prices to get rid of surplus stocks.
b.
finding the present value of future dollars.
c.
finding the future value of present dollars.
d.
giving special concessions to special customers.
____ 52. A decision to supply labor or not to supply it is also a decision to
a.
earn the highest possible wage.
b.
demand or forgo a certain amount of leisure.
c.
be as productive as possible.
d.
join the union.
____ 53. The income effect of a wage increase is expected to increase
a.
supply of labor.
b.
supply of goods and services.
c.
demand for leisure.
d.
demand for labor.
____ 54. The substitution effect of a wage increase
a.
probably leads most workers to want to work more.
b.
certainly leads all workers to want to work more.
c.
probably leads most workers to want to work less.
d.
certainly leads most firms to want to employ more workers.
____ 55. The shortened work week coupled with rising hourly wages in the U.S. economy shows that
a.
the income effect has been dominant.
b.
the substitution effect does not exist at all.
c.
the U.S. worker is no longer productive.
d.
workers have become increasingly lazy.
____ 56. The labor supply curve starts to bend backward at the point where
a.
the total utility of leisure exceeds the total disutility of labor.
b.
the marginal utility of additional income becomes zero.
c.
the income effect comes to dominate the substitution effect.
d.
the substitution effect comes to dominate the income effect.
Figure 20-3
____ 57. Figure 20-3 shows a worker's backward-bending supply curve of labor. Which of the following statements is correct?
a.
The substitution effect of a change in the wage dominates the income effect at all points on the curve.
b.
The income effect of a change in the wage dominates the substitution effect at all points on the curve.
c.
Above W*, the substitution effect of a change in the wage dominates the income effect; below W*, the income effect dominates the substitution effect.
d.
Above W*, the income effect of a change in the wage dominates the substitution effect; below W*, the substitution effect dominates the income effect.
a.
cutting prices to get rid of surplus stocks.
b.
finding the present value of future dollars.
c.
finding the future value of present dollars.
d.
giving special concessions to special customers.
Explanation / Answer
51.
finding the present value of future dollars.
In this we use teh cost of capital as the discount rate to determine PV as time has value , so we need to adjust that.
finding the present value of future dollars.
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