Question 1 According to the theory of the backward-bending labor supply curve as the wage rate rises:A. first the substitution effect sets in and then the income effect.B. first the income effect sets in and then the substitution effect.C. the substitution effect and the income effect set in at the same time.D. there is neither a substitution effect nor an income effect.Question 2Which statement is trueA. The highest paid professional athletes earn economic rent.B. Economic rent is paid on land but not in the form of wages.C. Economic rent is earned mainly by the poor and the lower middle class.D. Economic rent is paid in proportion to the marginal revenue product of a resource.Question 3 Conservative economists would like to help younger workers get work experience by:A. setting up a government jobs program.B. raising the minimum wage rate.C. lowering the minimum wage rate.D. passing a law requiring employers to hire teenagers ahead of older workers who are equally qualified.Question 4 Lorenz curves tell us about the:A. absolute distribution of income.B. poverty line.C. inverse relationship between price and the quantity demanded.D. relative distribution of income.

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