Suppose a Worker Is Observed to Be Working but Is

question 19

Multiple Choice

Suppose a worker is observed to be working but is forced to work fewer hours than she really wants to work. Which of the following statements is true?

• A) She is on an indifference curve which is lower than the one which is tangent to the budget line.
• B) She is on an indifference curve which is lower than the one which passes through the point on the budget line corresponding to zero hours of work.
• C) The indifference curve that she is on is tangent to the budget line.
• D) She is on an indifference curve which is higher than the one which is tangent to the budget line.
• E) She is not on an indifference curve.

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Definitions:

Long Run

A period in economic analysis where all factors of production can be varied, and no inputs are fixed.

Shut Down

The process of ceasing operations, often temporarily, due to various reasons like lack of demand, financial trouble, or external circumstances.

Diminishing Returns

The principle stating that if one factor of production is increased while others remain constant, the overall returns will eventually decrease after a certain point.

Negative Returns

A situation in which a business or investment loses more money than it earns or generates in revenue.