Econ 252 final
Refer to the scenario above. What is the price effect of the price change?
$2,000
Refer to the scenario above. Mr. Olivander used to sell only one wand per day. Now he plans to increase his sale to two wands. The price effect of this plan is a ________, and the quantity effect of this plan is a ________ in his revenue.
$25 decrease; $65 increase
Refer to the figure above. Under monopoly, producer surplus is ________.
Areas B + C
A dominant strategy ________
results in a high payoff irrespective of the strategy chosen by the other player
Refer to the table above. If the price of a chair increases to $20 and the rental price of machines is $200 per day, how many machines should the firm rent to maximize profits?
5
Takashi, an Asian, and Sally, a Caucasian, apply for a job that requires math skills. Takashi gets a job, because the employer bases the decision on the idea that Asians are, on average, better at math than Caucasians. This is an example of ________.
statistical discrimination
If leisure is a normal good, how will an increase in the wage rate affect an individual's desired quantity supplied of hours worked?
t may increase or decrease, depending on the relative magnitudes of the income and substitution effects.
A college graduate getting paid more than a high school graduate is due to ________.
the glass ceiling in the job market
Which of the following is a current example of a monopoly granted by legal market power? (You need to do some information gathering for this problem.)
Alcohol sales in Sweden
Refer to the table above. Which statement is true?
Alec and Ben both choosing Red is the dominant strategy equilibrium of this game.
Which of the following would NOT cause the labor supply schedule to increase (shift right)?
An increase in the firm's product price
Which of the following is likely to lead to a rightward shift in the supply curve of labor in an industry?
An increase in the number of immigrants from foreign countries
Which of the following is likely to lead to a leftward shift in the demand curve for labor in the petroleum extraction industry?
An increase in the price of cars
Other things remaining the same, which of the following is likely to increase both the wage rate and the number of workers hired on a rice farm?
An increase in the price of rice
Refer to the scenario above. What will likely be the outcome of this game?
Both of them will confess.
Other things remaining the same, which of the following is likely to happen if an industry introduces labor-saving technology in production?
Both the wage rate and the employment level will decrease in the industry.
Refer to the figure above. If this monopolist engages in the "first degree price discrimination," he will charge ________ per unit of its output.
different prices
A key resource is a material that is ________.
essential for the production of a good
The value of the marginal product of labor for a firm is the ________.
firm's product price multiplied by the marginal product of labor
A person's stock of skills to produce economic value is referred to as ________.
human capital
The price chosen by a monopolist ________.
is independent of the production of other firms
Refer to the scenario above. Lydia contends that the increase in female labor force participation was caused by a change in tastes for working among women in the United States after World War II. According to Lydia, ________.
labor supply increased
Non-paying activities in economics are referred to as ________.
leisure
Refer to the scenario above. Tobac Co. is forced by the government to charge the fair-return price, the producer surplus would be ________.
more than $50 million
Diet Coke ________ considered a product in a monopoly market, because ________.
s not; it has many substitutes
Refer to the scenario above. This is an example of a(n) ________.
simultaneous-move game
A network externality occurs when ________.
the value of a product increases as more consumers start to use it
A factor of production refers to any good or service that is ________.
used to produce other goods and services
Refer to the scenario above. Jill will derive ________ units of utility if she tries to move the tree while Jack does not try at all.
−5
Refer to the scenario above. When Tobac Co.'s profit is maximized, the deadweight loss is ________
$112.5 million
Refer to the figure above. If firm B wants to hire 6 employees and pay a wage of $6, what is the market price of its output?
$2
Refer to the scenario above. If the market for cigarettes in Nicotiana Republic were perfectly competitive, ________ cigarettes would be sold for ________ per pack.
150 million; $2.00
Refer to the scenario above. Jack will derive ________ units of utility if Jill tries to move the tree while he does not try at
2
If the value of the marginal product of physical capital is $30 and the price of the final good that is produced using the physical capital is $15, the marginal product of the physical capital used is ________.
2 units
Refer to the figure above. What is the optimal number of machines rented if the market rental price is $8 per month?
20 machines
The following table shows the demand and supply of labor in an industry. The equilibrium employment in this market is ________ hours per week and those workers are paid ________ per hour.
22; $11
Refer to the figure above. If the price of the output is $5.00 per unit and the wage is $30 per worker, the firm's optimal choice in the short run is to hire ________ workers.
3
Refer to the scenario above. If the wage rate in this market is equal to $18, this firm will hire ________ workers.
3
Other things remaining the same, which of the following is likely to cause a leftward shift in the supply curve of labor?
A decrease in population
The figure below shows the cost and revenue curves of a firm in a monopoly market. The profit of this monopolist is represented by the area ________.
AGMD
Refer to the scenario above. What is the equilibrium outcome in this case?
Both firms will dump their waste into the river.
Refer to the scenario above. Which of the following is true?
Company A should advertise if Company B decides to advertise its products.
Which of the following is NOT an important feature of the labor market that may give rise to differences in wages across workers?
Differences in physical capital
Refer to the scenario above. Which of the following is true in this case?
Firm 1's dominant strategy is to charge $5.
Why is statistical discrimination difficult to eliminate?
Firms may be pressured to discriminate as it can save them money.
Refer to the scenario above. Which statement is true?
Jessa's dominant strategy is X.
Which of the following correctly identifies the characteristics of land and capital?
Land and capital can both be rented and owned
Which of the following statements is true?
The basis for both first-degree and third-degree price discrimination is differences in buyers' willingness to pay for a good.
Which of the following games is a simultaneous-move game?
The rock-paper-scissor game
Refer to the figure above. What is the change in total revenue due to a price increase from $3 to $5?
Total revenue increases by $200.
The profit-maximizing rule for a competitive firm is to hire labor until ________.
Value of marginal product of labor = Wage
The problem of superbugs, which are bacteria that resist all available forms of antibiotics, is becoming a serious challenge for doctors. Developing new antibiotics is very costly. Can a monopoly be good for the society in this regard?
Yes, because innovation is more likely in a monopoly.
Refer to the scenario above. Is there a dominant strategy equilibrium?
Yes, both New Jersey and Pennsylvania lower their sales tax rates to 3 percent.
Sellers in ________ are likely to have the highest market power.
a monopoly
Land is ________.
a naturally occurring input whose supply is fixed
he optimal strategy of a goalie in penalty kicking is similar to that in ________.
a zero-sum game
Refer to the figure above. If the government decides to regulate this market at the socially optimal price level, it mandates the monopolist to sell its product ________.
at P3
Which of the following is an example of legal market power?
A patent
Scenario: When a monopolist charges $5 for its product, it sells 250 units of the product. When it decreases the price of the product to $4, it sells 325 units of the product.
$250
A monopolist faces a linear, downward-sloping demand curve. If the slope of the demand curve is 1 and the monopolist can sell one unit of output at a price of $10, what is the total revenue from selling the fourth unit of output?
$28
Refer to the scenario above. When Tobac Co.'s profit is maximized, each pack of cigarette is sold for ________.
$5.00
Refer to the figure above. What is the profit-maximizing price for the monopolist?
$6
Refer to the scenario above. After this migration, the wage rate in Delaware will equal ________.
$6
When a firm hires 10 units of labor, 20 pens are produced. When it hires another unit of labor, the total output increases to 23 pens. If the price of one pen is $2, the value of the marginal product of the eleventh unit of labor is ________.
$6
Refer to the figure above. If the market price of the output is $4 and the firm hires 4 employees, what is the wage rate such that the fourth employee hired brings in profits that exactly equal the marginal cost to the firm?
$60
Refer to the figure above. How much of the loss in consumer surplus generated by the single-price profit-maximizing monopoly remains part of social surplus?
(Q3 Q1) (P1 P4)/2
Refer to the scenario above. The symbol p is equal to ________, and the symbol w is equal to ________.
-1; 1
Refer to the scenario above. What is the value of the marginal product of labor when the first worker is hired?
30
Refer to the figure above. If the monopolist faces a constant marginal cost of $6, what is the optimal quantity that it should produce?
30 units
Refer to the figure above. What is the profit-maximizing quantity that the monopolist should produce if it faces a constant marginal cost of $3?
300 units
Refer to the table above. If the rental price of machines is $140 per day, how many machines should the firm rent?
4
Refer to the scenario above. If the marginal cost of a magic wand is $10, how many wands should Mr. Olivander sell to maximize his profit?
5
Refer to the scenario above. If the marginal cost of a magic wand is $20, how many wands should Mr. Olivander sell to maximize his profit?
5
Refer to the figure above. If the price of the output is $5.00 per unit and the wage is $10 per worker, the firm's optimal choice in the short run is to hire ________ workers.
6
Refer to the figure above. What is the optimal number of machines rented if the market rental price is $5 per month?
80 machines
Other things remaining the same, which of the following is likely to decrease both the wage rate and the number of workers hired on a tea estate?
A decrease in the price of tea
Which of the following is likely to cause a decrease in both the wage rate and the level of employment in an industry?
A leftward shift in the demand curve for labor, without any change in the supply curve of labor
Which of the following is an example of capital?
A tractor used by a farmer for plowing his field
Which of the following statements is true?
A worker is more likely to pay for general training than for firm-specific training.
Refer to the scenario above. This game ________.
does not have a dominant strategy equilibrium
Suppose that employers engage in statistical discrimination based on the information that, on average, women cost more to employ than men for various reasons. As a result, employers pay women less, on average, than they pay men. Assuming that the information is correct, what would be an effect of the law that requires employers to pay the same wage as men for the same job?
Fewer women will be employed.
Which of the following statements is true?
Firms under oligopoly produce either identical or differentiated products.
Refer to the scenario above. Suppose Hayley and Jack face this quandary repeatedly. What might each individual do when faced with repeated play of this game?
Randomize their choice of their own and their partner's preferred activities
Refer to the scenario above. Is Apple Inc. a monopolist in the e-book market?
No, because it is not the only seller of e-books without actual or potential competitors.
Refer to the scenario above. If the wage is $40,000 per month per worker, should the firm hire one worker or two workers?
One worker, because the firm's maximum profit will be higher than it would be for hiring two
Takashi, an Asian, and Sally, a Caucasian, apply for a job that requires math skills. The employer administers a math test. Sally gets a high score, while Takashi does dismally. The employer knows that Asians are, on average, better at math than Caucasians are. If the employer statistically discriminates candidates but does not discriminate based on taste, ________.
Sally would be hired
Other things remaining the same, which of the following is likely to increase both the wage rate and the number of workers hired in a steel-producing factory?
The introduction of labor-complementary technology in the factory
Refer to the scenario above. What is the change in total revenue due to the price reduction?
Total revenue increases by $50.
Which of the following is true of the market for labor?
Workers are the suppliers of labor.
Refer to the scenario above. This game is an example of ________.
a zero-sum game
In the tragedy of the commons game illustrated in the text using manufacturing firms located along the Gowanus Canal, the outcome of both firms polluting is ________.
all of the above
Meryl works 10 hours a day in an hourly job that pays $15 per hour. Suppose her wage rate increases to a really high rate of $10,000 per hour. In this case, Meryl will ________.
both A and B apply at the same time, and Meryl's supply will depend of their relative strengths
The market supply curve of labor in a perfectly competitive labor market ________.
can be derived by horizontally adding the individual supply curves of labor
Second-degree price discrimination occurs when ________.
consumers are charged different prices based on the characteristics of their purchases
The value of the marginal product of labor is the ________.
firms labor demand schedule
Sam Walton chose a very different strategy for locating his Wal-Mart discount stores than did his rivals in the 1960s. Specifically, Walton chose to locate his stores in cities that were much smaller than locations chosen by his rivals. Walton believed that once he located a store in these smaller communities, there would be no incentive for a rival discount retailer to build another store in the community. This is an example of ________.
first-mover advantage
Refer to the figure above. If the government decides to regulate this market at the socially optimal price level, the monopolist will ________.
make a positive profit
If workers are optimizing their total benefit, they will consume leisure until their ________.
marginal benefit of leisure equals their wage
The condition determining the optimal amount of leisure is that the ________.
marginal benefit of leisure should equal the wage rate
A skill-biased technological change is likely to ________.
ncrease the wage of skilled labor
Refer to the scenario above. If a > 3, then ________.
no pair of effort levels forms a Nash equilibrium
Alejandro is a computer programmer employed by XYZ Tech Corp. He is Hispanic. He gets an offer from another company that is trying to lure him away from XYZ and is willing to pay him a higher salary than XYZ pays him. Alejandro asks his boss whether the company is willing to match the offer to keep him at XYZ. His boss says, "Don't let the door hit you on your way out." Why did the boss fail to match the other firm's offer?
not clear why XYZ did not match the other firm's offer
A strategy is called a pure strategy if it involves choosing ________.
one particular action for a situation
In a zero-sum game, ________.
one player's loss is another player's gain
A ________ is the privilege granted to an individual or company by the government that gives them the sole right to produce and sell a good.
patent
The cost of using a good for some specific period of time is called the ________ of the good.
rental price
The investment by firms in the creation of products not yet available on the market is referred to as ________.
research and development
Technological changes that increase the productivity of skilled workers relative to that of unskilled workers are referred to as ________ technological changes.
skill-biased
Refer to the figure above. After the market changes from perfect competition to a monopoly, ________.
social surplus decreases
Based on research conducted on the productivity of Hispanic and non-Hispanic workers, an employer decides to hire non-Hispanic workers. This is an example of ________.
statistical discrimination
If a firm offers higher starting salaries to Asian job candidates than to white job candidates because Asians as a group have higher SAT scores, this is an example of ________.
statistical discrimination
Several businesses and organizations in Hawaii, including hotels, practice what is called kama'aina pricing. Under this pricing strategy, customers with a valid Hawaii driver's license are charged the lowest price, customers with a valid military identification card are charged slightly higher prices, and all other customers are charged the highest price for the identical good or service. This is an example of ________.
third-degree price discrimination