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:

Interest Payments

Payments made to a lender by a borrower in return for the use of borrowed money, typically represented as an annual percentage of the loan principal.

Unrealized Gain

An increase in the value of an asset that has not been sold yet; hence, the gain is not reflected in the income statement.

Stock Investment

The purchase of shares in a company with the expectation of earning a return in the form of dividends or capital gains.

Dividend

A portion of a company's earnings distributed to its shareholders as a return on their investment.