Author Question: An individual's labor supply curve will have a A) positive slope if the income effect exceeds the ... (Read 100 times)

karateprodigy · **on:** Jun 29, 2018

An individual's labor supply curve will have a

A) positive slope if the income effect exceeds the substitution effect.
B) negative slope if the substitution effect exceeds the income effect.
C) positive slope if the substitution effect exceeds the income effect.
D) negative slope regardless of whether the substitution effect or income effect is larger.

Question 2

Dan has a car valued at 10,000 that gives him a utility of 50 units. There is a 10 percent chance that he will have an accident that will make his car worthless, in which case his utility will be zero.

His utility from a wealth of 7,000 is 45 units. The maximum amount Dan will be willing to pay for car insurance is A) 1,000.
B) 3,000.
C) 7,000.
D) zero.