When Comparing Partial Equilibrium Effects to General Equilibrium Effects One

question 77

Multiple Choice

When comparing partial equilibrium effects to general equilibrium effects one can conclude that

• A) general equilibrium effects are always larger.
• B) partial equilibrium effects are always larger.
• C) the effects are of equal size.
• D) one cannot determine before the fact which effect is greater.

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Definitions:

Hourly Wage

The rate an employee is paid for each hour of work.

Labor-Supply Curve

A graphical representation showing the relationship between the amount of labor workers are willing to provide at different wage rates.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choosing to consume or produce one good or service over another.

Marginal Product

Marginal Product is the additional output resulting from a one-unit increase in the quantity of a particular input, holding all other inputs constant.