A nonmonetary opportunity cost is called a(n) ________, while a ...

[humphriesbr@me.com]

A nonmonetary opportunity cost is called a(n) ________, while a cost that involves spending money is called a(n) ________.
 
  A) implicit cost; explicit cost B) normal rate of return; asset
  C) accounting profit; economic profit D) accounting cost; explicit cost

Question 2

What determines the amount of labor that households plan to supply?
 
  What will be an ideal response?

[dantucker]

Answer to Question 1

A

Answer to Question 2

When households decide how much labor to provide in the labor market, they compare the market wage rate to the value of the lost leisure that supplying labor would entail. If the market wage rate exceeds the individual's reservation wage rate, the individual forgoes leisure and supplies labor to the labor market. The quantity of labor the person supplies depends on the wage rate. At most wage rates the substitution effect dominates the income effect so that a person increases the quantity of labor supplied if the wage rate rises. But at high wage rates the income effect dominates the substitution effect so that a person decreases the quantity of labor supplied if the wage rate increases.