1. True or false. The first word of your answer has to be either true or false. If the first word of your answer is not true or false, you receive 0 points. If the statement is true you are finished answering. If your answer is false, briefly explain why it is false. a. "If leisure is a normal good, a rise in the wage rate must lead to an increase in the number of hours that an individual wishes to work." b. "A good is inferior only if quantity demanded falls as price falls." c. " If the income effect is greater than the substitution effect and leisure is an inferior good, the labor supply curve will be negatively sloped."

a. FALSE, since leisure is a normal good, an increase in the wage rate will result in both substitution and income effect which will decrease the number of hours worked and increase the leisure hours.

b. TRUE

c. FALSE, if leisure is an inferior good, as rise in wages will result in more working hours and les leisure hours, meaning that the labor supply has a positive slope.

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know

u = 30

continuing your method

= +

subtract from both sides

= - thus

= -

= ⇒ u = 30