Suppose the labor force stays constant, and the working-age population stays constant, but a greater number of persons who were unemployed become employed. The labor force participation rate will
A) increase. B) remain constant.
C) decrease. D) not change in a way that can be predicted.
Question 2
Standard economic theory asserts that sunk costs are irrelevant in making economic decisions, yet studies conducted by behavioral economists reveal that sunk costs often affect economic decisions.
Which of the following could explain this observation?
A) Even though sunk costs cannot be recovered, it has been incurred and therefore should be treated as part of the product's value.
B) People measure the value of a good in terms of its purchase price.
C) Sunk costs have a higher opportunity cost than costs that can be recovered.
D) If consumers maximize their utility, it makes sense to consider the full purchase price of a product in their consumption decisions.
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