CHAPTER 17 PRACTICE

In general, game theory is the study of

how people behave in strategic situations

pushing wage above equilibrium level:

raises quantity of labor supplied and reduces quantity of labor demanded resulting in: surplus of labor or unemployment

In the prisoners' dilemma game with bonnie and clyde as the players, the likely outcome is...

a bad outcome for both players

human capital view pt 2

increasing education levels for all workers would raise workers productivity and wages

diminishing marginal product is closely related to

increasing marginal cost

Which of the following is not an example of a factor of production?

interest

Workers who work the night shift are often paid more than those who do identical work on the day shift. This is referred to as a

compensating differential

Which term do economists use to refer to a difference in wages that arises from nonmonetary characteristics of different jobs?

compensating differentials

Public school teachers are known to have low wages. Which of the following would push the teachers' wages lower?

teaching in a public school has a high element of personal satisfaction

The equilibrium quantity in markets characterized by oligopoly is...

higher than monopoly markets and lower than in perfectly competitive markets.

when labor supply increases,

wages decrease as long as labor demand is downard sloping

union

woker associaiton that bargains w employers over wages and working conditions

Refer to Table 17-11. If both firms follow a dominant strategy, Firm B's profits (losses) will be...

$-10. bcas Dominant is when doing what is best for self interest. (NO evidence for cancer and NO evidence for cancer)

Refer to Table 17-18. If these 2 firms play this game repeatedly, the likely outcome will be...

10 units of output for Firm A and 10 units of output for Firm B. Choose answer with smallest # for both Firms.

Refer to Table 17-18. The Nash equilibrium for this game is...

12 units of output for Firm A and 12 units of output for Firm B. Choose answer with highest # for both Firms

Assuming that all other things are equal, including the wage, which of the following statements is correct?

A. The quantity of labor supplied for easy jobs exceeds that for difficult jobs. B. The quantity of labor supplied for fun jobs exceeds that for dull jobs. C. The quantity of labor supplied for safe jobs exceeds that for dangerous jobs. D. ALL OF THE ABOVE

superstar phenomenon

Arises in 2 characteristics: 1. every customer wants to enjoy the good supplied by the best producer 2. good is produced with technology that makes it possible for the best producer to supple every customer

Refer to Table 17-1. If Rohelle and Alec operate as a profit maximizing monopoly in the market for water, what price should they charge?

B. $30 bcas at 30 you have highest total revenue value.

Refer to Table 17-5. Since Kunal and Naj operate as a profit maximizing monopoly in the market for water, what price will they charge for water?

C. $6 bcas at 6 you have highest TR value.

Refer to Table 17-3. If there is only one digital company in this market, what price would it charge for a premium digital channel subscription to maximize its profit?

C. $90 bcas when u charge 90 X 9,000 (from table) you get the greatest value compared to the other 3 options

Refer to Table17-9. If this market were perfectly competitive instead of oligopolistic, what quantity would be produced?

C. 1200 bcas MC and Price are equal at 10.

Strategic Situation

In the language of game theory, a situation in which each person must consider how others might respond to his/her own actions is called a...

The equilibrium price in a market characterized by oligopoly is...

Lower than monopoly markets and higher than in perfectly competitive markets.

As the number of firms in an oligopoly increases, the price approaches....

Marginal Cost

Consider a market served by a monopolist, Firm A. A new firm, Firm B, enters the markets and as a result Firm A lowers its price to try to drive Firm B out of the market. This practice is known as

Predatory Pricing

As the number of firms in an oligopoly increases, the magnitude of the....

Price effect decreases

the prisoners dilemma game...

Provides insight into why cooperation is difficult

Refer to Table 17-8. If there were many suppliers of bottled water, what would be the price and quantity?

The price would be $4 per gallon and the quantity would be 1200 gallons. bcas in question it says "assume MC of supplying water is constant at $4 per bottle.

Which of the following is an example of a compensating differential?

Two workers whose jobs entail different working conditions earn different salaries.

The practice of requiring someone to buy two or more items together, rather than separate is called.....

Tying

Refer to Table 17-12. When the game reaches Nash equilibrium, the value of trade flow benefits will be....

United States $35 b and Farland $285 b. bcas best strategy for both sides

Factory workers who work the day shift earn less per hour than similarly-skilled factory workers who work the night shift. The difference in pay is attributed to

a compensating differentail

Labor markets are different from most other markets because labor demand is

a derived demand

People are willing to invest in human capital because

a. the demand for skilled labor is higher than for unskilled labor. b. it increases the marginal product of their labor. c. firms are willing to pay more for more productive workers. d. All of the above are correct.

Which of the following variables related to a worker's wage are the most difficult to measure?

ability effort and chance

efficiency wages:

above equilibrium wages paid by firms to increase worker activity

human capital:

accumulation of investments in people such as education and on the job training

collusion

agreement among firms in a market about quantities to produce or prices to charge

consider the market for medical doctors. Suppose the opportunity cost of going to medical school decreases for many individuals. Suppose it generally takes about ten years to become a practicing doctor. else constant, in ten years the equilibrium wage for doctors will

decrease

Suppose a labor-augmenting technology were developed for a product that increased the marginal product of labor for all workers. Which of the following would happen in the labor market for this product?

demand would increase

Offering different opportunities to similar individuals who differ only by race, ethnic group, sex, age, or other personal characteristics is called

discrimination

signaling view pt 2

education does not enhance productivity so raising all workers educatio levels would not affect wages

signaling view:

education is correlated with natural ability

human capital view

education makes workers more productive

Certain factors that are probably important in determining wages are nevertheless difficult to measure. Consequently, labor economists find those factors difficult to incorporate into their studies of labor markets and wages. Those factors include

effort and natural ability

if selling price of a bushel of cranberries rises, we would expect the demand for labor in the cranberry industry to..

increase

In the United States, the earnings gap between workers with college degrees and workers with high school degrees

is evident and it has widened over the last several years

upward sloping labor supple curve

means ppl respond to an increase in wage by working more hours and less leisure

strike

organized withdrawl of labor from a firm by a union

when a production function exhibits a diminishing, but positive, marginal product of labor,

output increases, but at a decreasing rate, as more workers are employed

rental price

price a person pays to use that factor of production for a limited period of time

purchase price

price a person pays to use that factor of production indefinitely

for a profit maximizing competitive firm the value of a marginal product curve is...

the labor demand curve

Which of the following statements represents the idea behind signaling in education?

the more naturally productive people are more inclined to educate themselves.

Refer to Table 17-15. Which of the following outcomes represents a Nash equilibrium in the game?

Middle- Right. bcas biggest values in the pair.

Refer to Table 17-8. If there are 2 suppliers of water, Victor and Sami, and if they have successfully formed a cartel, then what would be the price and the market quantity?

Price would be 7 per bottle and market quantity would be 600 bottles. AKA LOWEST PRICE BETWEEN ALLL 4 OPTIONS

Predatory Pricing involves a firm...

Temporarily cutting the price of its product to drive a competitor out of the market

Since people get sick at all hours of the day, some nurses who work in hospitals are required to work the night shift. In most cases, the nurses who work the night shift earn a higher hourly wage for the same work as the nurses who work the day shift. This difference in pay is referred to as a

compensating differential

The wage difference between jobs that require education and those that don't

encourages workers to bear the cost of acquiring education

what causes the labor demand curve to shift? i changes in productivity ii changes in wages iii changes in output prices

i and ii

Refer to Table 17-20. If Nadia chooses to clean, then Maddie will....

not clean, and Maddie's payoff will be 50. BCAS neither of them enjoy cleaning (stated in question) since Nadia does clean maddie WILL NOT.