Exam 3 Microeconomics

Firm C

(Figure: Market Power) Based on the demand curves for four sellers, which of the following sellers has the most market power?

quantity = 4; price = $7.00

(Figure: Output Level) According to the rational rule, what output and price should the firm in the following example choose?

a check mark is put next to each player's best response, and there is a cell with a check mark for each player

A Nash equilibrium can be identified on a payoff table when:

making a good choice requires that you anticipate what others will do.

A basic logic that applies to all strategic interactions is

price fluctuation; the hurdle method

A certain shampoo is on sale twice a year, every year. This is an example of a seller using _____ as a form of _____ to achieve price discrimination

haggling

A furniture store owner allows its salespersons to lower a price by up to ten percent to gain a sale if the buyer appears price sensitive. The owner also instructs salespersons to confer with management about the possibility of higher discounts if needed to make a sale. This example of individually negotiated prices is a form of price discrimination known as

a monopolistically competitive market

A market with a large number of sellers and a high level of product differentiation is known as

prejudice

A preconceived bias against a group that's not based on reason or experience is known as:

reducing; the price is above its marginal cost

A price-discriminating company can attract more customers by _____ price, as long as _____

each player must choose without knowing the other player's choice

A simultaneous game is one in which:

higher the buyers' reservation price will be

A useful rule of thumb is that the higher the marginal benefit a consumer gains from a product, the

marginal cost equals marginal revenue; that is on the seller's demand curve at that output level

According to the Rational Rule for Sellers, a seller should choose the output level where _____ and the price level _____.

two units; $450

According to the Rational Rule for Sellers, the manager of this company should choose to produce _____ of output and charge a price of _____.

Yes, it was a good move because it added more to revenue than to cost

Alena manages a small theme park. She hires one more custodian at $450 per week, and her park is cleaner and more attractive. As a result of this improvement, ticket sales rise by 40 tickets per week. Tickets sell for $12. Use the Rational Rule for Employers to determine if hiring the extra custodian was a good move.

higher wage paid to encourage greater worker productivity

An efficiency wage is a:

more productive workers may be forgone in order to hire less productive workers who have preferred characteristics.

An employer who discriminates in hiring based on prejudice is likely to have higher costs than necessary because:

quantity discount

Bayside Shoe Shop offers a BOGO (buy one, get one) special where customers can buy one pair at full price and get another pair at half-price. This form of price discrimination is referred to as

invests in job-specific skills

Callie's firm uses a proprietary and complicated production process to ensure product quality. Her workers are carefully trained in this process as soon as they are hired. Callie thereby:

higher salaries for more unpleasant jobs.

Compensating differentials lead to:

Higher wages

Consider the labor market, predict which of the following create an incentive for investment in capital?

if you find it easy

Consideration of the benefits of choosing an occupation should NOT include

fairness

Consumer backlash against price discrimination often focuses on the issue of

backward reasoning

Coordination problems can be solved through each of the following approaches EXCEPT:

Public or private school attendance

Corinne gives private art lessons to children. She wants to price discriminate based on the household income of her students. She does not know the exact household income of her students but wants to estimate it, to put them into different price segments. What easily verifiable measure of income could she use?

lives up to a core set of ideals that workers identify with

Employees will be motivated to work hard and try to help their employer succeed if the company:

the science of making good decisions in situations involving strategic interactions

Game theory is:

They are price-sensitive

Hassan is a student who received a coupon to buy pizza from Pizza House at $4 off the regular price. Students at Hassan's school seem to receive the coupons frequently. Which of the following is an assumption that the owners of Pizza House are making about students at Hassan's school?

Provide training

How can a company's hiring manager attract workers who are motivated to advance in their field?

Unionized workers earn more.

How does the pay of unionized workers compare with that of nonunionized workers in similar jobs, on average?

The discount effect would be smaller for a change from 100 to 101 units than 1,000 to 1,001 units

How would the discount effect on marginal revenue differ for a seller increasing sales from 100 units to 101 units compared to an increase in sales from 1,000 units to 1,001 units?

left because employees are more expensive to the firm

If a company incurs expenses to start providing childcare at work so that employees can have lunch with their preschool children, the company's demand curve for labor will shift to the

marginal revenue product of; increase

If the demand for Ono Yo's organic frozen yogurt increases, then the _____ Ono Yo's workers will _____.

wage; hours of labor

In a labor market graph, _____ is measured on the vertical axis, and _____ is measured on the horizontal axis.

they would not be able to hire anyone

In a perfectly competitive labor market, employers will not pay less than the market wage because at a wage below the equilibrium

the employers looking to hire programmers.

In the labor market for computer programmers, the labor demand represents

Oligopoly

In which market structure do the actions of a rival have a significant impact on your operations?

more than a compensating differential because she has greater concerns than most workers

Kaila wants her employer to pay her 20% more for making night deliveries in a high-crime neighborhood than the day delivery people receive. Most of the delivery people are willing to make night deliveries in the neighborhood for only a 10% differential. Kaila is seeking:

pay-for-performance

Linking your workers' earnings to their performance is called:

Marta has little understanding of how much each customer values her product

Marta owns a food truck. Which of the following would limit Marta's ability to price discriminate?

A new branch is formed

Once an original decision has been made, what happens on a game tree with each additional decision made by a player?

underproduction

One of the market failures caused by market power is

The drugs would not have been developed.

Patents on drugs to treat AIDS were removed in South Africa. How would the market for these drugs have been different if there had never been patents on drugs?

bring down price in a competitive market

Price ceilings tend to create shortages when used to

the product cannot be resold

Price discrimination can be successful only if

a more efficient output

Price discrimination leads to _____ than a one-price system

reservation price

Selling alternative versions of a product at different prices is a way to identify the _____ of customers and charge them different prices

reduce; the amount of the reduction

Studies of the minimum wage indicate that minimum wage laws _____ employment opportunities for low-skilled workers, but there is less agreement regarding _____

Offering imperfect goods as part of the hurdle method

Sun Do sells key chains with leather fobs for $12 and $9. The key chains are very similar and have identical manufacturing costs. The difference is that the stitching on the leather fob is in a less precise pattern on the $9 key chain than it is on the $12 key chains. What approach to price discrimination is Sun Do using?

Graph B

Supermarkets need to hire fewer cashiers, due to self-checkout counters. Which graph shows what happens to the labor market for cashiers?

one more hour as long as the wage is at least as large as the marginal benefit of another hour of leisure

The Rational Rule for Workers is to work

human capital

The accumulated knowledge and skills that make a worker more productive are known as:

could have been bought with the income earned

The costs of working do NOT include what

lower the market output

The higher the level of market power among the sellers in a market, the _____ when the Rational Rule for Sellers is applied.

how people's choices change when they have more income.

The income effect measures

nonwage benefits increase for social workers

The labor supply curve for social workers will shift to the right when:

marginal revenue product.

The marginal revenue from hiring an additional worker is known as

MPL × P

The marginal revenue product of labor is equal to

what you would have done during the time if you were not working

The opportunity cost of working is

The optometrist labor supply curve shifts leftward

The population of Japan is declining. What impact will this have on the labor market for optometrists in Japan?

how many workers to hire

The three key labor market decisions that you make do NOT include

malevolent bias.

The three sources of discrimination do NOT include:

would be a natural monopoly, and the good or service is considered essential

To avoid harm to society, the government often becomes the supplier of a good or service when the respective market

jointly represent a group of workers in negotiating with employers.

Unions are organizations that:

three

Use the data in Table: Pat's Pedicures to answer the question. If Pat uses the Rational Rule for Employers, how many nail technicians will she hire?

a payoff table

Use the table about Hikaru and his parents to answer the question What is this kind of table called?

$4,000; $3,500

Use the table with data for Bella and Martin to answer the question. With no cooperation, the Nash equilibrium yields Bella a profit of _____ and Martin a profit of _____.

$7; $6,000

Use the table with data for Gizelle and Devin to answer the question. Devin tries to put himself in Gizelle's place. He concludes that if he (Devin) charges $8, then Gizelle will charge _____ to earn a profit of _____

$4; $4

Use the table with data for Maria and Jose to answer the question If Jose charges $8, Maria should charge _____. If Jose charges $4, Maria should charge _____.

$3,000; $3,000

Use the table, with data for Tasha and Hui Er, to answer the question. Use the check mark method to determine which cell contains a Nash equilibrium. Under a Nash equilibrium, Hui Er earns profits of _____, and Tasha earns profits of _____

a monopolistically competitive market

Walmart has a large aisle that displays many different kinds of toothpastes. This observation indicates that the toothpaste market is

The amount of consumer information available to the company

What factor determines how many segments to divide your demand in for group pricing?

It has increased the gap in income significantly

What impact has technology had on the difference between the income of the best engineers and that of good engineers?

Agreements between sellers to increase their market power

What is collusion?

It is difficult to achieve the commonly desired outcome

What problem arises in coordination games with multiple equilibria?

positive

What type of relationship exists between the level of a company's market power and the price that its owner is able to charge for its product?

The supply of workers will increase, resulting in a lower wage and higher quantity of labor.

What will happen in the labor market for aestheticians if the government deregulates the industry and no longer requires individuals to obtain a license to work as aestheticians?

not a price-taker

When a company has market power, it is _____ in its market

company's marginal cost equals the last customer's marginal benefit

When a company practices price discrimination, it will keep adding customers until the point where the

an anti-coordination

When a player's best response is to take a different (but complementary) action to the other player, then both participants are playing _____ game

the hurdle method; reservation price

When a seller offers lower prices to those buyers who are willing to overcome some obstacle to get it, the seller is using _____ to get buyers to reveal their _____

product price is lower

When buyers in a market have market power, then the

a higher wage.

When it is hard to monitor worker productivity, employers often pay:

make agreements not to compete with each other and, typically, to charge high prices

When players in a game collude, they:

at or just below the marginal benefit

When price discriminating, a company owner should set price _____ for each customer.

supply decreases

When the government requires that a person have a license to work in a particular occupation, then in the labor market for that occupation

all people keep their money in the bank

When using coordination games to look at the issue of bank runs, the best outcome occurs when:

Account address

Which criteria for market segmentation would be easiest to use for an online retailer?

Graph A

Which graph shows the scenario where the substitution effect dominates labor supply decisions?

Segmenting the market into identifiable groups with different prices

Which of the following is NOT an example of the hurdle method of price discrimination?

Assume that others will defer to your action

Which of the following is NOT one of the four steps for making good strategic decisions?

Any differences in wages between members of different racial or age groups is due to discrimination.

Which of the following is NOT true regarding discrimination in labor markets?

There is only one seller

Which of the following is a characteristic of monopoly that is not present in other market structures?

In one evening, many more people can view a movie than can see a Broadway play

Which of the following is a valid explanation of why a star movie actor earns many times more than a star Broadway actor?

Most passengers traveling on an airplane pay different prices for their tickets

Which of the following is an example of a company practicing price discrimination?

Shares of McDonald's stock

Which of the following markets is an example of a perfectly competitive market?

No player can do better by unilaterally changing his or her choice

Which of the following statements regarding a Nash equilibrium is TRUE?

The government increases its provision of childcare services

Which of the following would shift the labor supply curve?

diminishing marginal product

Why does an employer's labor demand curve slope downward?

Monopolizing

_____ using specific business practices that increase a seller's market power and excludes other sellers is illegal under U.S. law