McQ3. (2 PoINTS) Which of the following statements are cor and income? rect rega
ID: 1131964 • Letter: M
Question
McQ3. (2 PoINTS) Which of the following statements are cor and income? rect regarding hours of work Select one answer a. The US have higher GDP per capita than Mexico as Americans work more hours than b. An increase in th c. If your real wage increases, your opportunity cost of leisure also increases Mexicans e real wage rate may only induce you to increase the number of hours worked, it will never decrease the number of hours worked. d. The income effect asso ciated to an increase in the real wage is always equal to the substitution effect MCQ4. (2 POINTS) Which of the following statements best describes the game played by the employer and the employee in the labour discipline model? Select one answer a. The game is a one shot game where the employer chooses the wage level and the employee chooses the effort level simultaneously the job and the overall disutility of work. worker's unemployment benefit. b. The game is a sequential game with two Nash equilibria. c. The worker selects the effort level that balances the trade-off between the rent he gets from d. The employer will attempt to maximise the firm's profit by offering a wage equal to the McQ5. (2 POINTS) Consider a firm with fixed costs of production. Which of the following statements is correct regarding average cost (AC) and marginal cost (MC) of the firm? Select one answer a. When AC MC, the AC curve has zero slope b. When AC>MC, the MC curve is downward-sloping c. When ACMC, the AC curve is upward-slopingExplanation / Answer
3) As the real wage or income goes up,the relative value of leisure also increases since the demand for leisure would expectedly increase following the rise in real wage considering leisure as a normal good and the number of hours worked would reduce(income effect).Consequently,as the number of hours worked is reduced the opportunity to earn higher increased wage is sacrificed thereby increasing the opportunity cost of leisure.
Thus,the correct answer is option-c) or if your real wage increases,your opportunity cost of leisure also increases.
4) Based on Labour Discipline Model,a worker would choose an optimal effort level at work which would establish a balanced trade off between the employment rent of the worker meaning the probability/apprehension of employment termination and the additional costs associated with it and the overall disutility obtained from the job.
Hence,the correct answer is option-c) or worker selects the effort level that balances the trade-off between the rent he gets from the job and overall disutility of work.
5) In this case,the Average Cost(AC)=Marginal Cost(MC) of production as the Total Cost(TC) of production is fixed and the slope of the AC curve would be 0.
Therefore,the right answer is option-a) or When AC=MC,the AC curve has a zero slope.