Econ final exam
Suppose Microsoft is able to price discriminate. Consumer surplus is ______ and deadweight loss is______ A) $0; $0 B) $0; $12 C) $24; $12 D) $12; $48
A) $0; $0
What is the amount of government revenue after the government imposes the tax on themarket? A) 32 B) 40 C) 20 D) 16
A) 32
Patrick has decided to open a day care center. He is deciding how many workers to hire. He hasdone some research and has determined that he can charge $50 per child per day. He has alsodetermined how many children his company can care for per day for varying number ofemployees. This information is shown in the table below. For example, if he has two employees,they can take care of a total of 15 children per day. What is the marginal product of labor for the second employee? A) 7 children cared for B) 16 children cared for C) $800 D) $350
A) 7 children cared for
According to what we learned in class, which of the following is true about the CongressionalBudget Office's estimations of what would happen if the minimum wage increased from $7.25to $10.10? A) A lot of people's wages would increase B) There would be a large increase in the unemployment rate C) Most of the people who benefit from this policy are below the poverty line
A) A lot of people's wages would increase
For each of the following, classify whether the country's comparative advantage comes fromAbundant Inputs, Specialized Skills, or Mass Production. A) The ocean around Norway is full of lobster and other shellfish, and Norway exports a lot ofseafood. B) Latvia has one of the largest manufacturing plants in the world: Lauma Fabrics, which makesfabric used in clothing. C) During the Renaissance, many of the world's greatest artists lived in Italy, where they studiedtogether and learned from each other
A) Abundant Inputs B) Mass Production C) Specialized Skills
The Marginal Revenue Product curve represents: A) Demand for labor B) Supply of labor C) Costs of labor
A) Demand for labor
The city of Eagleton raises the minimum wage from $9 per hour to $16 per hour. As a result ofthis minimum wage increase, there is a large increase in the unemployment rate. This suggeststhat the demand for labor is relatively A) Elastic B) Inelastic
A) Elastic
Continuing with the previous question, if Michigan were to simplify these licensingrequirements, which of the following would likely happen: A) Existing establishments would be less profitable B) The number of licensed marijuana establishments would decrease C) The equilibrium price of marijuana would increase D) The number of licensed marijuana establishments would be unaffected
A) Existing establishments would be less profitable
Chad loves playing Valorant on his computer. He will work as much as necessary toafford his apartment, food, and other necessities, but he prefers to spend as much timeas possible playing Valorant. If Chad gets a raise, we expect him to choose to work___________ A) Fewer hours because for Chad, the income effect is very important B) More hours because for Chad, the income effect is very important C) Fewer hours because for Chad, the substitution effect is very important D) More hours because for Chad, the substitution effect is very important
A) Fewer hours because for Chad, the income effect is very important
According to what we learned in class, what is the main reason that perfect (first-degree) price discrimination is so rare? A) Finding everyone's willingness to pay is costly and difficult. B) Overcoming legal conflicts to charge each person differently is costly. C) Not every person has a maximum willingness to pay for a good. D) Most consumers have identical preferences
A) Finding everyone's willingness to pay is costly and difficult.
You get a sweater that you don't like for your birthday. You sell it on eBay. This is an example of: A) How markets reallocate resources to better uses B) How eBay allows you to reallocate your purchasing power over time C) How you have a comparative advantage at selling goods on eBay
A) How markets reallocate resources to better uses
Relative to traditional monopoly pricing, price discrimination leads to A) Increased quantities B) Decreased quantities
A) Increased quantities
Which of the following best describes a market where a seller with market power would use the"hurdle method"? A) College students have a higher willingness to pay for textbooks than non-college students B) Some theater fans can't afford to pay full-price for Broadway shows, but they are willing toin line to purchase discount tickets C) People are willing to pay a higher price for human medicine than they are willing to pay forpet medicine D) People with higher incomes can afford to pay higher college tuition
B) Some theater fans can't afford to pay full-price for Broadway shows, but they are willing toin line to purchase discount tickets
Which of the following is an example of a cartel:A) Apple designs FaceTime so that it cannot be used by anyone without an iPhone B) Two beer distributors agree that each of them will serve half of the city of Lansing C) McDonald's runs a radio commercial that says its French fries taste better than Burger King's D) Pfizer charges a very high price for a cancer treatment drug that it has patented.
B) Two beer distributors agree that each of them will serve half of the city of Lansing
The "pink tax" is a term used to describe instances when products marketed to women cost morethan nearly-identical products marketed to men. An article in Yahoo! Finance stated that "Productsmarketed toward women tend to cost more than the same products for men. On average, personalcare items that are marked "for women" cost 7% more than ones aimed at men. Most of the time,these products have very little difference when it comes to performance, or the men's version isactually crafted better than the one geared toward women." Suppose that the cost of making"men's" and "women's" razors is identical, but women's razors cost more at the store. According towhat we learned about price discrimination, this suggests that: A) Men have higher incomes B) Women receive higher marginal benefits from razors C) Men receive higher marginal benefits from razors
B) Women receive higher marginal benefits from razors
Human capital is: A) capital equipment made by hand. B) accumulated knowledge and skills that make a worker more productive. C) capital equipment that must be operated by humans. D) human labor used in place of machines
B) accumulated knowledge and skills that make a worker more productive.
Consumers who clip and redeem discount coupons ________. A) exhibit the same price elasticity of demand for a given product than consumers who do not clip and redeem coupons B) exhibit a relatively higher price elasticity of demand for a given product than consumers who do not clip and redeem coupons C) exhibit a relatively lower price elasticity of demand for a given product than consumers who do not clip and redeem coupons D) cause total revenue to decrease for firms that issue coupons for their products
B) exhibit a relatively higher price elasticity of demand for a given product than consumers who do not clip and redeem coupons
Amanda buys a ruby for 330 for which she was willing to pay 340. The minimum acceptableprice to the seller, Tony, was 140. Tony experiences a A) producer surplus of 470 and Amanda experiences a consumer surplus of 670. B) producer surplus of 190 and Amanda experiences a consumer surplus of 10. C) consumer surplus of 670 and Amanda experiences a producer surplus of 470. D) consumer surplus of 10 and Amanda experiences a producer surplus of 190
B) producer surplus of 190 and Amanda experiences a consumer surplus of 10.
Marshall is willing to pay $4 for a cupof coffee. Brad is willing to pay $2 for a cup of coffee. It costs Cool Beans Coffee Company $1 to make acup of coffee. Assume that Marshall and Brad are the only two potential customers for this coffee shop. Suppose Brad is a college student and has a student ID; Marshall is not a college student. Cool BeansCoffee Company could maximize profits by charging college students a price of ____________ andnon-college students a price of _________ A) $2; $2 B) $4; $4 C) $2; $4 D) $4; $2
C) $2; $4
Assume the government imposes $2.25 tax on suppliers, which results in a shift of the supplycurve from S1 to S2. The price the consumer pays for the product after the tax is imposed on thesuppliers is A) $1.25. B) $2.50. C) $3.50 D) $2.25
C) $3.50
Parker owns a car wash. She currently has four employees and is able to wash 18 carsper day. If she hires a fifth employee, she will be able to wash 21 cars per day. Carwashes cost $10 each. What is the marginal revenue product of the fifth employee? A) $3 B) 21 car washes C) $30 D) 3 car washes
C) $30
Assume the government imposes a $3 tax on buyers, which results in a shift of the demand curvefrom D1 to D2. The government's tax revenue is A) $2,400. B) $2,100. C) $900. D) $600
C) $900.
The below table gives the quantity demanded at various prices and the marginal cost of productionfor various quantities. According to what we learned in class, what quantity will a profit-maximizingfirm produce A) 1 B) 2 C) 3 D) 4
C) 3
What is the amount of deadweight loss after the government imposes the excise tax on themarket? A) 44 B) 36 C) 8 D) 4
C) 8
In a model of perfect competition, the demand curve that an individual firm sees is: A) Downward sloping B) Upward sloping C) A horizontal line D) A vertical line
C) A horizontal line
Which of the following is NOT an example of price discrimination? A) Sony sells cheaper Blu-ray discs overseas, but you cannot use them in an American Blu-ray player B) Colleges offer need-based financial aid C) A jewelry store charges a higher price for a gold ring than it charges for a silver ring D) McDonald's offers half-price coffee to senior citizens
C) A jewelry store charges a higher price for a gold ring than it charges for a silver ring
Relative to a model of perfect competition, a monopolist produces A) The same quantity B) A higher quantity C) A lower quantity
C) A lower quantity
The below game could best be described as: A) A coordination game B) An anti-coordination game C) A prisoner's dilemma D) A game with no Nash equilibrium
C) A prisoner's dilemma
Which of the following is an example of a situation where we could expect to see third-degree pricediscrimination: A) Charging college students a lower price for groceries B) A shoe store occasionally sending 10% off coupons in the mail C) A restaurant offering senior citizens 10% off on their breakfast D) A buffet charging hungrier people higher prices
C) A restaurant offering senior citizens 10% off on their breakfast
According to what we learned in class, which of the following is not an example of a downside ofredistribution: A) Eddie moves to Nashville to try to be a professional singer, even though he can't sing. Heplans to rely on unemployment benefits for his income B) Eric cheats on his income taxes C) Angelica takes out student loans to attend law school. She graduates, gets a high-paying jobwith a law firm, and repays her loans. D) The government has to hire thousands of employees to process claims for Medicare andMedicaid
C) Angelica takes out student loans to attend law school. She graduates, gets a high-paying jobwith a law firm, and repays her loans.
Greg owns a company which manufactures dishwashers. He employs forklift drivers tomove refrigerators around his factory and warehouse. Which of the following willincrease the demand for forklift drivers? A) A decrease in the price of forklifts. B) An increase in the demand for dishwashers. C) Better management results in forklift drivers being more productive.
C) Better management results in forklift drivers being more productive.
Spain goes from being an autarchy to allowing world trade. As a result, Spain begins exporting olives. How does world trade affect consumer and producer surplus for olives? A) Consumer surplus increases and producer surplus increases B) Consumer surplus increases and producer surplus decreases C) Consumer surplus decreases and producer surplus increases D) Consumer surplus is unaffected and producer surplus decreases
C) Consumer surplus decreases and producer surplus increases
Jack and Vince are friends who were planning to watch a football game together at a bar tonight.They were deciding between Buffalo Wild Wings and Harper's. Neither of them really has apreference for which bar to go to - they just want to be together. Jack's cell phone died before theycould finalize their plans, so they don't know which bar to meet at. This could be categorized as a A) Hawk-Dove game B) Prisoners' Dilemma C) Coordination game D) Game with no Nash Equilibrium
C) Coordination game
In a 2002 opinion piece, a Stanford student criticizes several aspects of the college admissionsprocess. Some quotes from the article include:"Every American high schooler knows the supposed secret to a lifetime of success: admission toan elite university.""But in California, some of the best private high schools in the country compete in a state wherepublic ones rank in the bottom half of the nation. Private high schools help the rich insulate theirchildren and provide them with the best secondary education possible — while everyone elsestruggles to keep up.""Students at private schools have personal connections with their counselors, who often in turnhave the ears of admission officers at elite universities across the country."These quotes suggest that the author is especially concerned with: A) Expensive college tuition B) Equality of outcomes C) Equality of opportunity D) Income redistribution
C) Equality of opportunity
Which of the following is consistent with a model of perfect competition? A) A small number of sellers B) Lots of firms selling slightly different products C) Firms are "price takers" D) Demand slopes up E) The demand curve is a vertical line
C) Firms are "price takers"
Which of the following statements is true: A) Player 1 has a dominant strategy B) Player 2 has a dominant strategy C) Neither player has a dominant strategy
C) Neither player has a dominant strategy
According to what we learned in class, what is the marginal cost of working for one hourif your hourly wage is $12 per hour? A) $12 B) $0 C) One hour of leisure D) One hour of work
C) One hour of leisure
Subscribing to Disney Plus costs $7.99 per month. Subscribing to Hulu costs $7.99 per month. Thereis also a bundle available that includes subscriptions to both services and costs $9.99 per month.This suggests that A) The marginal cost of providing the services is $7.99 per month B) People with a high willingness to pay for Disney Plus also have a high willingness to pay forHulu C) People with a high willingness to pay for Disney Plus have a low willingness to pay for Hulu D) People with a high willingness to pay for Hulu get no enjoyment from having a Disney Plussubscription
C) People with a high willingness to pay for Disney Plus have a low willingness to pay for Hulu
One argument for redistribution is based on diminishing marginal benefits. Suppose Walterearns $1 million per year while Oliver earns $15,000 per year. Which of the following best summarizes the "diminishing-marginal-benefits" argument for redistributing wealth from Walterto Oliver A) The marginal value of the 15,000 th dollar of income is greater for Walter than for Oliver B) For Walter, the marginal value of dollar $1,000,001 is greater than the marginal value ofdollar $15,001, while for Oliver the opposite is true. C) The marginal value of dollar $1,000,001 is less than the marginal value of dollar $15,001. D) It is not fair for Walter to earn so much more money than Oliver earns
C) The marginal value of dollar $1,000,001 is less than the marginal value of dollar $15,001.
At equilibrium, consumer surplus would be represented by the area A) a + b B) a + b + c C) a. D) b
C) a.
If a price floor in this market is set at P2, then A) government revenue equals area b. B) government revenue equals area d. C) government does not raise revenue. D) government revenue equals the distance between P1 and P2.
C) government does not raise revenue.
If demand increased by 100 units at each price level, and the government set a price ceiling of$40, then there will be A) a shortage. B) a surplus. C) no shortage or surplus. D) decrease in supply.
C) no shortage or surplus.
If a good that generates negative externalities were priced to take these negative externalities intoaccount, its A) price would decrease, and its output would increase. B) price would remain constant and output would increase. C) price would increase, and its output would decrease. D) price would increase but its output would remain constant
C) price would increase, and its output would decrease.
If a price ceiling is set below the equilibrium price in a market A) Quantity supplied will equal quantity demanded B) surpluses of the commodity will develop. C) the quantity demanded will exceed the quantity supplied. D) the quantity supplied will exceed the quantity demanded.
C) the quantity demanded will exceed the quantity supplied.
Third-degree price discrimination for concessions at ball parks is not applied to adults and children because_____. A) children's demand for food is elastic and adults' demand for food is inelastic B) adults' demand for food is elastic and children's demand for food is inelastic C) there could be exchange of the products from children, who could buy them at a lower price, to adults D) Adults would buy goods at a high price and give them to their children
C) there could be exchange of the products from children, who could buy them at a lower price, to adults
You own a barber shop. Hiring a worker will increase the number of haircutsyour shop can give from 30 per day to 35. Haircuts cost $20 each. What is themarginal revenue product of that worker? A. $5 B. $20 C. $100 D. $35
C. $100
Assume the government imposes a $3 tax on buyers, which results in a shift of the demandcurve from D1 to D2. The amount of the tax (per unit) paid by the consumer is A) $8. B) $3. C) $2 D) $1.
D) $1.
You own a snow shoveling company. You have four employees and are considering hiring afifth. Hiring a fifth employee will increase the number of houses you can serve from 45 to50. You charge $30 per house. What is the marginal revenue product of the fifth employee? A) 5 houses B) 10 houses C) $20 D) $150 E) $1,000
D) $150
Marshall is willing to pay $4 for a cupof coffee. Brad is willing to pay $2 for a cup of coffee. It costs Cool Beans Coffee Company $1 to make acup of coffee. Assume that Marshall and Brad are the only two potential customers for this coffee shop. Suppose Cool Beans Coffee Company must charge all customers the same price. The companyshould charge a price of __________. It will earn a profit of _______. A) $2; $6 B) $2; $4 C) $4; $2 D) $4; $3
D) $4; $3
The graph below shows demand and marginal revenue for a firm with some market power. (You'llhave to figure out which is which). What is the socially optimal quantity? A) 3 B) 5 C) 10 D) 20
D) 20
José owns a business that repairs car windshields. The price to repair a windshield is$50, and the equilibrium wage for employees is $100 per day. According to the tablebelow and the Rational Rule for Employers, how many workers should José hire?Number ofemployeesTotal numberof repairs1 6 2 11 3 15 4 17 5 18 A) 1 B) 2 C) 3 D) 4 E) 5
D) 4
What is the value of consumer surplus? A) 54 B) 44 C) 12 D) 6
D) 6
___________ has a comparative advantage at making bracelets and ___________ has acomparative advantage at making candlesticks. A) Sean; Audis B) Sean; Sean C) Audis; Audis D) Audis; Sean
D) Audis; Sean
___________ has a lower opportunity cost of making bracelets and ___________ has a loweropportunity cost of making candlesticks. A) Sean; Audis B) Sean; Sean C) Audis; Audis D) Audis; Sean
D) Audis; Sean
Last week, Odalys carved 2 wooden flutes. She could have built 3 drums. What is heropportunity cost of carving a flute? A) Carving 1 flute B) Building 3 drums C) Building 2/3 of a drum D) Building 1.5 drums
D) Building 1.5 drums
"Creator" was a hamburger restaurant opened in San Francisco in which the entirepreparation of the hamburger was done by a machine. (The machine is shown above. Avideo of the machine in action can be found here.)If machines like the ones used at "Creator" become more common, we expect this to _______the wages of low-skill restaurant workers and ______ the wages of high-skill programmersand engineers. A) Increase; Decrease B) Increase; Increase C) Decrease; Decrease D) Decrease; Increase
D) Decrease; Increase
The equilibrium wage for grocery store cashiers is $15 per hour. Sam's Supermarket justopened, and Sam is planning to hire dock workers to unload food from trucks. He plans to paythem $15 per hour. Relative to working as a cashier, being a dock worker is more dangerous andrequires workers to work odd hours. What do we expect to happen? A) Most cashiers will quit their jobs to work as dock workers B) Sam will have lots of workers apply to be dock workers, leading to a labor shortage C) Sam is overpaying dock workers, so he will lower dock worker wages D) Few workers will work for Sam unless he increases dock worker pay
D) Few workers will work for Sam unless he increases dock worker pay
Which of these industries would be the closest to "monopolistic competition"? A) Soybeans B) A gas station without any local competitors C) Cell phone providers D) Ice cream
D) Ice cream
Which of the following is an example of someone benefitting from social insurance: A) Sara buys homeowners insurance B) Abby buys a smoke detector C) Natalie gets a payoff from her auto insurance company when she gets in a car accident D) Josephine gets workers compensation when her employer goes out of business
D) Josephine gets workers compensation when her employer goes out of business
This table gives how many of each good two workers can produce in an hour: What is Sean's opportunity cost of making a bracelet? A) Making 3 bracelets B) Making 8 candlesticks C) Making 3/8 of a candlestick D) Making 8/3 candlesticks
D) Making 8/3 candlesticks
Chris and Jalen are playing a game of rock-paper-scissors. They have decided to wager on the game. Theloser pays the winner $1. If there is a tie, no money exchanges hands. Use this information to answerthe next two questions.5) Chris plays rock and Jalen plays paper. Which of the following is true? A) Both players are playing a best response B) Neither player is playing a best response C) Only Chris is playing a best response D) Only Jalen is playing a best response.
D) Only Jalen is playing a best response.
Which is most likely to be observed in a community where price ceilings are imposed on residential rents? A) Poor people will be able to find adequate housing. B) Homeowners will reduce their own use of housing space, making more available to others. C) Those whose needs for housing are most urgent will be able to obtain the space they want D) People moving into the community will have difficulty locating residential space to rent
D) People moving into the community will have difficulty locating residential space to rent
Asarta Inc. is polluting into a nearby fishing stream; doing so benefits them $40,000 a year. Thefishermen are unhappy as their trout are dying off. Typically, the fishermen can catch trout and sell it toa local market where they can earn about $8,000 a year. Currently, Asarta Inc. has the rights to use thestream as they see fit. Which of the following is an optimal solution according to the Coase Theorem? A) Asarta Inc. could pay the fishermen $7,000 and keep polluting B) Asarta Inc. could pay the fishermen $8,500 and keep polluting C) The fishermen could pay Asarta Inc. $4,000 to stop them from polluting D) There is no optimal solution given the current property rights
D) There is no optimal solution given the current property rights
Use the following diagram of the market for product X to answer the question below.Curve St embodies all costs (including externalities) and Dt embodies all benefits (including externalities)associated with the production and consumption of X. Assuming the market equilibrium output is Q1,we can conclude that the existence of external A) costs has resulted in an overproduction of X. B) benefits has resulted in an overproduction of X. C) costs has resulted in an underproduction of X. D) benefits has resulted in an underproduction of X
D) benefits has resulted in an underproduction of X
When producers do not have to pay the full cost of producing a product, they tend to A) overproduce the product because of a positive externality. B) underproduce the product because of a positive externality. C) underproduce the product because of a negative externality. D) overproduce the product because of a negative externality.
D) overproduce the product because of a negative externality.
Use the following supply and demand graph to answer the question below.S1 and D1 represent the current market supply and demand, respectively. S2 and D2 represent thesocially optimal supply and demand. One way that the government could shift demand to its sociallyoptimal level is to A) tax the sellers. B) tax the buyers. C) subsidize the sellers. D) subsidize the buyers.
D) subsidize the buyers.
Why can a company with monopsony power in its labor market succeed in paying low wages? a. Workers don't have other employment options. b. The employer doesn't have other options for employees. c. There is a very limited supply of workers. d. It must charge a low product price, so it cannot afford to pay a high wage
a. Workers don't have other employment options.
Social safety nets, social insurance programs, and progressive tax systems are all types of income _____programs that have the impact of moving income distribution _____ equality. a. redistribution; closer to b. replacement; further from c. redistribution; further from d. replacement; closer to
a. redistribution; closer to
A characteristic of monopolistic competition that is not present in any other market structure is that there a. is only one seller and that seller holds a high level of market power. b. are many sellers and each produces its own version of the product. c. are a small number of sellers who have market power. d. are many sellers that produce identical products
b. are many sellers and each produces its own version of the product.
When an individual's best choice may depend on what other people choose and other people's best choicesmay depend on what the individual chooses, then _____ is the science that is useful to help the decision makersanalyze their options. a. strategic interaction theory b. game theory c. analytical strategy d. partial equilibrium analysis
b. game theory
If Bella and Martin successfully cooperate, then Bella's profit will be _____, and Martin's profit will be _____. a. $6,000; $1,000 b. $4,000; $3,500 c. $5,000; $5,000 d. $1,000; $5,500
c. $5,000; $5,000
A coordination game exists when: a. the product or issue of the game concerns communication, such as phones or media. b. coordination is costless and easy, regardless of whether it is harmful. c. all players have a common interest in coordinating their choices. d. collusion created the market or situation from the start
c. all players have a common interest in coordinating their choices.
Based on the Rational Rule for Sellers, how does a manager set price and quantity? If the company has nomarket power, the marginal cost _____ price. If the company has market power, the marginal cost is _____ thanprice. a. is less than; greater b. is greater than; less c. equals; less d. equals; greater
c. equals; less
Unions try to _____ union members by _____. a. ensure more jobs for; reducing wages b. ensure more jobs for; raising wages c. raise wages of; shifting the labor supply curve to the left d. raise wages of; shifting the labor supply curve to the right
c. raise wages of; shifting the labor supply curve to the left
In a monopoly, there is one _____; in a monopsony, there is one _____. a. unit of product; price b. price; unit of product c. seller; buyer d. buyer; seller
c. seller; buyer
Use the check mark method to determine which cell has a Nash equilibrium. When there is a Nash equilibrium,Vlad earns profits of _____, and Assad earns profits of _____. a. $3,000; $3,000 b. $3,500; $500 c. $500; $3,500 d. $2,000; $2,000
d. $2,000; $2,000
Which of the following conditions is present for all sellers in a perfectly competitive market? a. All sellers have an equal and high level of market power. b. The product price varies across the sellers. c. The number of sellers is small. d. All sellers are selling identical products
d. All sellers are selling identical products
Which of the following statements is true regarding discrimination in labor markets? a. When discrimination occurs, all workers are treated equally. b. If two workers in the same job have different salaries, one is a victim of discrimination. c. If average income differs across groups of workers, there is discrimination. d. Discrimination accounts for only part of the differences in wages across groups of workers
d. Discrimination accounts for only part of the differences in wages across groups of workers
When a seller has a high level of market power, the seller a. produces a product that is identical to the output of other companies in the market. b. is in a market with growing demand. c. is one of many sellers selling in its market. d. can raise its price without losing many customers.
d. can raise its price without losing many customers.
Which of the following is NOT among the main factors affecting wages? a. discrimination b. regulation and institutional factors c. labor demand d. complements
d. complements
Kaila wants her employer to pay her 20% more for making night deliveries in a high-crime neighborhoodthan the day delivery people receive. Most of the delivery people are willing to make night deliveries in theneighborhood for only a 10% differential. Kaila is seeking: a. a compensating differential based on her individual concerns about the risks. b. a compensating differential because others are undervaluing her concerns. c. less than a compensating differential because she is asking for more than others are. d. more than a compensating differential because she has greater concerns than most workers.
d. more than a compensating differential because she has greater concerns than most workers.
(Figure: Output Level) According to the rational rule, what output and price should the firm in the followingexample choose? a. quantity = 6; price = $6.00 b. quantity = 4; price = $4.00 c. quantity = 8; price = $9.00 d. quantity = 4; price = $7.00
d. quantity = 4; price = $7.00
Social insurance programs do NOT: a. set individual benefits based on past income. b. obtain revenue through program-specific taxes and fees. c. cover both rich and poor. d. use a means test to qualify people for benefits
d. use a means test to qualify people for benefits
So, for example, Johnny's greatest profits come if he opens a coffee shop and Rachel opens a donutshop, while Rachel's greatest profits come if she opens a gym and Johnny opens a smoothie shop.Johnny and Rachel cannot communicate, so this functions as a simultaneous game (which is the onlytype of game we have discussed in class). Which of the following is a Nash Equilibrium?Hint: you should turn the above rankings into a payoff matrix and solve the payoff matrix like we did inclass. A) Johnny opens a smoothie shop, Rachel opens a gym B) Johnny opens a smoothie shop, Rachel opens a donut shop C) Johnny opens a donut shop, Rachel opens a gym D) This game does not have a Nash Equilibrium
A) Johnny opens a smoothie shop, Rachel opens a gym
Louisa owns a lawnmowing service. She hires high school students and college students tomow lawns for homes and businesses in the area. This summer, Louisa upgraded herlawnmower fleet by purchasing new mowers that are much faster and allow her employeesto cut lawns in half the time. According to what we learned in class, how will this shiftLouisa's labor demand? A) Labor demand shifts right B) Labor demand shifts left C) Labor demand is unaffected
A) Labor demand shifts right
The Olive Garden / Applebee's Hawk-Dove game discussed in class had the following payoff table:Which of the following strategies by Applebee's would be most likely to lead them "winning" the gameand keeping Olive Garden from entering A) Make a binding commitment to the city of East Lansing: Applebee's will get a small tax break ifthey enter but will pay a huge fine if they decide not to enter. B) Announcing on television that they have decided not to enter the market (but secretly planningon entering the market). C) The mayor of the town secretly offers Applebee's a bribe if they will enter the market
A) Make a binding commitment to the city of East Lansing: Applebee's will get a small tax break ifthey enter but will pay a huge fine if they decide not to enter.
Micah eventually saves enough money to buy his Corvette. He finally has ahobby: driving his Corvette around town so that everyone can see his car andbe impressed. How will buying the corvette affect Micah's labor supply curve? A) Shift to the left B) Shift to the right C) Movement up and to the right along the curve D) Movement down and to the left along the curve
A) Shift to the left
The graph below is for the supply and demand of oil in the United States. The U.S. allows for theinternational trade of oil. Which of the following statements is most likely to be true: A) The U.S. will export some of the oil it produces B) The U.S. will import all of the oil it consumes C) The U.S. will export all of the oil it produces D) The U.S. will neither import nor export oil
A) The U.S. will export some of the oil it produces
Assume the government imposes a $2.25 tax on suppliers, which results in a shift of thesupply curve from S1 to S2. The amount of the tax paid by the seller (per unit) is A) $2.25. B) $1.25 C) $1.00 D) $0.
B) $1.25
Suppose Microsoft has market power but is not able to price discriminate. What will Microsoft'sprofits be? A) $0 B) $12 C) $24 D) $48
B) $12
Patrick has decided to open a day care center. He is deciding how many workers to hire. He hasdone some research and has determined that he can charge $50 per child per day. He has alsodetermined how many children his company can care for per day for varying number ofemployees. This information is shown in the table below. For example, if he has two employees,they can take care of a total of 15 children per day. What is the marginal product of labor for the second employee? Suppose that the market wage for a childcare worker is $350 per day. According to theRational Rule for Employers that we learned in class, how many workers should Patrickhire? A) 1 B) 2 C) 3 D) 4
B) 2
What is the amount of producer surplus after the government imposes the tax on the market? A) 40 B) 32 C) 9 D) 7
B) 32
If the government imposed a price ceiling of $15, then buyers will be intending to buy ________,but they will be able to buy ________. A) 30 units, 24 units B) 36 units, 24 units C) 36 units, 30 units D) 24 units, more than 24 units
B) 36 units, 24 units
Which of the following statements is true: A) Labor unions shift the labor demand curve to the right B) A monopsony will likely lead to lower wages C) All wage differences between men and women are due to discrimination D) Jobs which are unpleasant will have a compensating differential in pay, which leads toworkers at this job being paid less.
B) A monopsony will likely lead to lower wages
Globalization has made it easier for American companies to offshore work formerly done in the U.S. Some people think that this has resulted in American workers "competing" against cheaper labor. Despite this, American wages are still much higher than the wages in China and other low-income companies. This is mostly because: A) Tariffs prevent most international trade B) American workers are more productive than the workers in these countries C) Americans choose not to import goods from low-wage companies D) Greater competition prevents wages from changing
B) American workers are more productive than the workers in these countries
Asarta Inc. is polluting into a nearby fishing stream; doing so benefits them $40,000 a year. Thefishermen are unhappy as their trout are dying off. Typically, the fishermen can catch trout and sell it toa local market where they can earn about $8,000 a year. Currently, the fishermen have the rights to usethe stream as they see fit. Which of the following is an optimal solution according to the CoaseTheorem? A) Asarta Inc. could pay the fishermen $7,000 and keep polluting B) Asarta Inc. could pay the fishermen $8,500 and keep polluting C) The fishermen could pay Asarta Inc. $4,000 to stop them from polluting D) There is no optimal solution given the current property rights
B) Asarta Inc. could pay the fishermen $8,500 and keep polluting
Micah really wants to buy a new Corvette. So, he spends very little money onanything other than essentials. He saves the rest of his income in his"Corvette Fund". He doesn't really have any hobbies. If Micah gets a raise atwork, we expect him to choose to work _______ hours because the incomeeffect is ______ important for his decision making: A) More; very B) More; not very C) Fewer; very D) Fewer; not very
B) More; not very
Chris and Jalen both play rock. Is this a Nash Equilibrium? A) Yes, because neither player has an incentive to unilaterally deviate from their chosen strategy B) No, because both players have an incentive to unilaterally deviate from their chosen strategy C) No, because only one player has an incentive to unilaterally deviate from their chosen strategy D) Yes, because no money changes hands, so no player is made worse off by the game
B) No, because both players have an incentive to unilaterally deviate from their chosen strategy
The graph below shows the demand curve and marginal revenue curve for a firm with market power(you'll have to figure out which is which). What are the profit-maximizing price and quantity? A) P=6, Q=2 B) P=8, Q=2 C) P=6, Q-5 D) P=5, Q=5
B) P=8, Q=2
If Player 1 plays "Top", what is Player 2's best response? A) Left B) Right C) Bottom
B) Right
Kristen's hobbies mostly involve hanging out with big groups of people indoors - going toconcerts, visiting restaurants, and going out dancing with her friends. During the 2020pandemic, many of these options were unavailable to her due to government-mandatedbusiness closures. How did this affect Kristen's labor supply curve? (A couple notes: First,assume that the labor demand curve for Kristen did not change. Second, use what we knowabout the opportunity cost of labor to answer this question) A) Shifted to the left B) Shifted to the right C) Movement "up" along the supply curve D) Movement "down" along the supply curve
B) Shifted to the right
Which of the following statements is true regarding views of what is "fair"? a. Everyone tends to agree that things should be fair, but everyone does not agree on exactly what isfair. b. Everyone tends to agree that things should be fair, and everyone tends to agree on what is fair. c. Few believe that things should be fair, and everyone does not agree on exactly what is fair. d. Few believe that things should be fair, but everyone tends to agree on what is fair
a. Everyone tends to agree that things should be fair, but everyone does not agree on exactly what isfair.
Which of the following is NOT true about imperfect competition? a. Greater product differentiation decreases market power. b. A smaller number of sellers in a market increases market power. c. Imperfect competition among buyers gives them bargaining power. d. Sellers with market power can use independent pricing strategies.
a. Greater product differentiation decreases market power.
In which of the following situations would Maria's Doughnut Shop have the LEAST market power? a. Within three miles, there are five other doughnut shops and three bakeries that sell breakfast pastries. b. There are two rival doughnut shops within three miles but no other bakeries. c. The closest doughnut shop is 10 miles away, but there is a bakery with breakfast pastries two milesaway. d. The closest doughnut shop or bakery is 25 miles away from Maria's shop
a. Within three miles, there are five other doughnut shops and three bakeries that sell breakfast pastries.
Suppose Microsoft is able to price discriminate. What will Microsoft's profits be? A) $0 B) $12 C) $24 D) $48
C) $24
Suppose Microsoft is engaged in perfect competition and has no market power. What is consumersurplus? A) $0 B) $12 C) $24 D) $48
C) $24
The global market for American-made movies has grown substantially over the last few decades.For example, in 2002, the highest-grossing movie was Spider-Man, which earned $404 million inthe United States and $418 million in the rest of the world. In 2019, the highest-grossing moviewas Avengers: Endgame, which earned $858 million in the United States and $1.9 billion in therest of the world. Note that the U.S. revenue approximately doubled while the non-U.S. revenuenearly quadrupled. Movie star salaries have also gone up sharply over that time period. Forexample, in 2002, no actor made more than $30 million for a film. In 2019, Robert Downey Jr.was paid $75 million to star in Avengers: EndgameThis massive increase in actor salaries is an example of: A) The economics of superstars B) Workers becoming less productive C) A decrease in inequality D) The effect of occupational licensing
A) The economics of superstars
What would cause the labor demand for hair stylists (shown above) to shift from the"Before" curve to the "After" curve? A) The equilibrium price of a haircut doubles B) The wages of baristas increase C) The taxes on haircuts increase D) A haircutting robot is invented
A) The equilibrium price of a haircut doubles
Bad weather in Columbia reduces the amount of coffee grown and, as a result, the price ofcoffee is higher when you are at the grocery store. Which of the following is true: A) The high price is an incentive for you to buy tea instead of coffee B) The high price is an incentive for you to buy extra coffee C) The high price is a signal that the opportunity cost of buying coffee has gone down
A) The high price is an incentive for you to buy tea instead of coffee
The above graph from ConcertArchives.org shows the number of concerts that Taylor Swifthas performed each year. There is a general downward trend there (even ignoring thepandemic-caused dip in 2020 and 2021).For example, in 2007, she performed in 178 concerts. Often she was the opening act for amore famous performer, so she made much less money per show than she makes now. Thefact that Taylor gives fewer concerts now than she did in 2007 suggests that, for her, A) The income effect is larger than the substitution effect. B) The substitution effect is larger than the income effect. C) The substitution effect is equal to the income effect. D) Your opportunity cost of working is negative.
A) The income effect is larger than the substitution effect
Among the following examples, the one that best illustrates a public good is a(n) A) The satellites used by the GPS technology in cell phones and other electronics B) A movie on Netflix C) Medical marijuana D) Fish in the ocean
A) The satellites used by the GPS technology in cell phones and other electronics
Which of the following statements is true: A) This game's only Nash Equilibrium is (Top, Right) B) This game has two Nash Equilibria: (Middle, Left) and (Top, Right) C) This game has no Nash Equilibrium D) This game has three or more Nash Equilibria
A) This game's only Nash Equilibrium is (Top, Right)
McDonald's has been promoting the "McRib FarewellTour", encouraging customers to purchase thesandwich and suggesting that it may soon bepermanently removed from the menu. This is one ofMcDonald's many recent marketing moves that haveled the Wall Street Journal to claim "McDonald's isCool Again". That article notes that McDonald's isseeing increased visits to its stores and increasedrevenue. How would we expect this to affect thewages of McDonald's workers? A) Wages increase because labor demand increases B) Wages increase because labor demand decreases C) Wages increase because the supply curve of McRib sandwiches shifts to the right D) Wages increase because the labor supply curve shifts to the left
A) Wages increase because labor demand increases
Kara owns a company that makes jackets. Her company is doing well and she's consideringexpanding by hiring more employees. However, she knows that if she hires more employeesand increases her production, she will have to cut prices in order to sell more jackets. This isa good example of: A) Why labor demand slopes down B) Why Marginal Resource Cost is a horizontal line C) Why machinery is not a good substitute for high-skill labor D) Why marginal revenue product is upward sloping
A) Why labor demand slopes down
You own a barber shop. Hiring a worker will increase the number of haircutsyour shop can give from 30 per day to 35. What is the marginal product oflabor of that worker? A. 5 haircuts B. 35 haircuts C. $5 D. $35
A. 5 haircuts
A market with lots of competitors all selling slightly different products would be categorized as: A) Perfect competition B) Monopolistic competition C) Monopoly D) Oligopoly
B) Monopolistic competition
In the 2023-2024 basketball season, the highest paid NBA player is Stephan Curry, who makes$52 million per year. Three of his teammates make "only" $560,000 per year, so Curry makesalmost 100 times as much money as them. However, most people are not concerned about thisinequality.1 According to what we learned in class, why is it that people might consider thisoutcome to be "fair" A) There is an equality of outcomes, because Curry and his teammates play for the sameteam and will share in their team's success B) Curry's salary is the result of a fair process - NBA teams choose to pay the best playersthe most money; if any player becomes as good at basketball as Curry is, that playercould command a gigantic, Curry-level salary. C) Curry has a greater marginal benefit from an extra dollar of income than his teammatesdo.
B) Curry's salary is the result of a fair process - NBA teams choose to pay the best playersthe most money; if any player becomes as good at basketball as Curry is, that playercould command a gigantic, Curry-level salary.
Francine owns a bar. The property next door is available, and Francine isconsidering using that space to expand her bar. If she does this, she will haveto hire more workers. She also will need to offer daily happy hour specials inorder to get extra customers to come. This is an example of: A) Diminishing marginal product B) Declining output prices C) Labor-capital substitution
B) Declining output prices
Francine owns a restaurant and is considering expanding her restaurant and hiring moreworkers. However, she knows that if she does this, she will have to offer daily happyhour specials in order to get extra customers to come. This is an example of: A) Diminishing marginal product B) Declining output prices C) Labor-capital substitution
B) Declining output prices
Online college exams have become more common, but one major concern for students andprofessors is the amount of cheating that occurs. According to what we learned in class aboutcoordination games, which of the following would be an effective deterrent to cheating: A) E-mailing students a reminder of the penalties for cheating B) E-mail students results from a study which found that cheating in online exams is very rare andactually less common than cheating in in-person exams C) Offer students an A if they turn in a classmate for cheating D) Send students an e-mail reminding them how important their grades are for future success
B) E-mail students results from a study which found that cheating in online exams is very rare andactually less common than cheating in in-person exams
According to what we learned in class, which of the following statements about redistribution ofincome is not true: A) There are substantial differences over what a "fair" outcome is B) Economists have the ability to use mathematics to show what a "fair" outcome will be C) There are substantial costs to redistributing income D) Redistribution can be thought of as a form of social insurance
B) Economists have the ability to use mathematics to show what a "fair" outcome will be
Entrepreneurs who wish to open a licensed marijuana retail establishment in Michigan must gothrough an extensive and complicated application process. Which of the following statements islikely true: A) Existing businesses like these complicated restrictions because they shift labor demand tothe right B) Existing businesses like these complicated restrictions because they shift labor supply to theleft C) Existing businesses do not like these complicated restrictions because they shift labordemand to the right D) Existing businesses do not like these complicated restrictions because they shift labor supplyto the right
B) Existing businesses like these complicated restrictions because they shift labor supply to theleft
A country goes from being an autarchy to being an exporter of rice. Which area in the graph below represents the additional economic surplus created when the country allows free trade in rice? A) E+D B) F C) A+B+E+F D) E+D+F
B) F
According to what we learned in class, which of the following statements about inequality istrue? A) Most poor people are senior citizens B) Full-time workers are unlikely to be in poverty C) Fewer than 10% of Americans ever experience poverty D) Married couples are more likely to be in poverty than single parents are.
B) Full-time workers are unlikely to be in poverty
When demand is __________________, a big increase in price will cause a smalldecrease in quantity A) Elastic B) Inelastic
B) Inelastic
According to what we learned in class, which of the following statements about inequality istrue? A) The lowest-earning people in the U.S. are considerably poorer than the lowest-earningpeople in other advanced democracies B) Inequality in the United States is greater now than it was fifty years ago C) There is more inequality in permanent income than in income at a given point in time D) The highest-earning people in the U.S. have around the same income as the highest-earningpeople in other advanced democracies
B) Inequality in the United States is greater now than it was fifty years ago
Anna and Elsa are in the school cafeteria eating lunch. Anna has a peanut butter sandwich andElsa has a turkey sandwich. Their valuation of each good is given in the table below. They decide to trade. How is total economic surplus affected by their trade? A) It is unchanged B) It increases by $3 C) It decreases by $3 D) It increases by $6 E) It decreases by $6
B) It increases by $3
Based on what we've learned in class, you should keep doing something until: A) Marginal Benefit equals zero B) Marginal Benefit equals Marginal Cost C) Marginal Benefit is maximized
B) Marginal Benefit equals Marginal Cost
Which of the following is true for both perfect competition and monopoly? A) Price = Marginal Cost B) Marginal Revenue = Marginal Cost C) The quantity sold maximizes total surplus D) Price > Marginal Revenue
B) Marginal Revenue = Marginal Cost
