Question

1. Based on the substitution effect, an increase in wage will reduce nonmarket activities.

   True

   False

1.5 points   

QUESTION 2

1. The indifference of a workaholic is stepper than that of a laid-back person.

   True

   False

1.5 points   

QUESTION 3

1. The slope of the budget constraint is the negative of the marginal rate of substitution.

   True

   False

1.5 points   

QUESTION 4

1. The budget constraint rotates outward if wage increases.

   True

   False

1.5 points   

QUESTION 5

1. Based on the substitution effect, an increase in wage will reduce nonmarket activities.

   True

   False

Answer 1

Question 1) False Explanation - Decrease in wage increases the non-market activities.

Question 2) True explanation-  It will have steeper in difference  curve as workaholic may perform worse than laid back workers  

Question 3) False explanation-  It will have not have steeper but flatter slope

Question 4) True explanation - yes budget constraint rotates outward if wage increases

Question 5) False Explanation - Decrease in wage increases the non-market activities.