Exhibit 10-1  Labor and Output Data in Exhibit 10-1, If

question 11

Multiple Choice

Exhibit 10-1  Labor and output data In Exhibit 10-1, if product price is fixed at $8, the MRP of the 2nd worker is equal to:

• A) $25.
• B) $125.
• C) $200.
• D) $175.
• E) $45.

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Definitions:

Income Effect

Refers to the change in the quantity of a product demanded by consumers due to a change in their income.

Price Sensitivity

The degree to which the price of a product or service affects consumers' purchasing behaviors or demand for that product or service.

Elastic

Describes a situation in economics where the demand or supply for a product changes significantly when its price changes.

Inelastic

Refers to a market for a product or service that is price insensitive; that is, relatively small changes in price will not generate large changes in the quantity demanded.