Micro 3

If the marginal product of labor at Sam's Waffle House is 12 customers per hour, and the price of a meal is $12, then the marginal revenue product of labor is: $12. $7.5. $24. $144.

$144.

If Maria charges $8, then Jose's best option would be to charge_____ in order to earn _____. $4; $280 $4; $180 $8; $180 $8; $40

$4; $280

If Maria charges $8, the Jose should charge _____. If Maria charges $4, then Jose should charge _____. $4; $4 $4; $8 $8; $4 $8; $8

$4; $4

(Figure: Labor Supply) Which graph shows the substitution effect dominating labor supply decisions?

A

(Figure: Labor Supply) Which graph shows the income effect dominating labor supply decisions at high but not low wages?

D

Which graph shows the scenario where the income effect dominates labor supply decisions only at high wages? A B C D

D

10. The labor demand is a/an _____________ demand Modified Imputed Derived Inferred

Derived

The marginal revenue product of labor is equal to: MPL + P. MR × Wage. MR + Wage. MPL × P.

MPL × P.

An equilibrium in which the choice that each player makes is a best response to the choices other players are making is the definition of a: market equilibrium. Coase theorem solution. Nash equilibrium. strategic equilibrium.

Nash equilibrium.

In a natural monopoly, what deters new sellers from entering the market? The existing seller has higher costs and profits than what the new entrant will face. Marginal revenue will be higher for new entrants, making profits less probable. The new seller would have much higher costs than the existing large seller in the market. The existing monopolist has long-term contracts with buyers.

The new seller would have much higher costs than the existing large seller in the market.

The government increases the training requirements to obtain an electrician's license. What impact will this have in the labor market for electricians? The demand for electricians will decrease, resulting in a lower wage and lower quantity of labor. The demand for electricians will increase, resulting in a higher wage and higher quantity of labor. The supply of electricians will decrease, resulting in a higher wage and lower quantity of labor. The supply of electricians will increase, resulting in a lower wage and higher quantity of labor.

The supply of electricians will decrease, resulting in a higher wage and lower quantity of labor.

How might the formation of a union impact the productivity of a company? Unions reduce productivity by raising costs. Unions reduce productivity by raising worker confidence and morale. Unions increase productivity by ensuring that there are more workers on the payroll. Unions increase productivity by improving communication between workers and management.

Unions increase productivity by improving communication between workers and management.

Why is market power necessary for price discrimination? Market power increases competitive pressures, which facilitates discriminatory pricing. When a seller has market power, his product cannot be resold. Market power allows a seller to control the market demand, and that allows him to set price. Without market power, a seller would lose customers if he tried to charge a higher price.

Without market power, a seller would lose customers if he tried to charge a higher price.

Which statement BEST describes a negative externality? • Your neighbor has a honey farm, and the bees pollinate your orchard. Your neighbor has an ornamental pond that breeds mosquitoes. • Your neighbor is a landscape architect who uses her property to demonstrate beautiful landscaping, increasing the value of all of the houses on the block. • You can use your neighbor's pool whenever you wish.

Your neighbor has an ornamental pond that breeds mosquitoes.

Workers on the night shift at a factory earn more per hour than workers on the day shift, although their human capital and discrimination based on time preferences. discrimination based on time preferences. irrational decision making by an employer. a compensating differential. an efficiency wage.

a compensating differential.

Workers on the night shift at a factory earn more per hour than workers on the day shift, although their human capital and productivity are the same. This is an example of: discrimination based on time preferences. irrational decision making by an employer. a compensating differential. an efficiency wage.

a compensating differential.

A tax designed to induce people to take account of the negative externalities that they cause is referred to as _____ tax. an externality an open offset a corrective a compensatory

a corrective

When price discrimination is practiced, a company sells _____ and charges _____ compared to what it would do without practicing price discrimination. a larger output; a greater range of prices the same output; a greater range of prices a smaller output; higher prices a higher output; higher prices

a larger output; a greater range of prices

When a good is nonrival and nonexcludable, the good is referred to as: a free-ride benefit good. an external good. a priivte good. a public good.

a public good.

An efficiency wage is NOT _____ but rather _____. a variable wage; a reward a reward; an incentive an incentive; a fixed wage a fixed wage; a variable wage

a reward; an incentive

An externality is defined as: the effect of an activity undertaken outside a building rather than inside a building. an effect of market activity that impacts the opposite side of the market from the side whose decision caused the effect. a side-effect of an activity that affects bystanders whose interests are not taken into account. the impact of an activity on buyers and sellers in the market where the activity takes place.

a side-effect of an activity that affects bystanders whose interests are not taken into account.

The market power of a firm is its: O ranking based on units sold compared to other firms selling the same product. O ability to charge a price equal to marginal cost. O ability to raise its price without losing many of its customers to competing businesses. number of years in business.

ability to raise its price without losing many of its customers to competing businesses.

An efficiency wage is: above the equilibrium wage and paid to provide incentivize greater worker productivity. • efficient because it equals the marginal product of labor. • determined through collective bargaining between unions and management. equal to the value of the marginal product of labor adjusted to make the structure of compensation more equitable.

above the equilibrium wage and paid to provide incentivize greater worker productivity.

A signal is: an action taken to credibly convey information that is hard for someone else to verify. advance notice of an action that will be taken in the future. a price tag. an indicator of the equilibrium wage and quantity in a market.

an action taken to credibly convey information that is hard for someone else to verify.

What is collusion? cooperation between sellers to increase the level of competition regulatory restrictions on the entry of new sellers into a market a merger of two sellers an agreement between sellers to increase their market power

an agreement between sellers to increase their market power

A characteristic of oligopoly that is not present in any other market structure is that there is only one seller and that seller has a high level of market power. are many sellers and each produces its own version of the product. are a small number of sellers with considerable market power. are many sellers that produce identical products.

are a small number of sellers with considerable market power.

Jackson operates in a perfectly competitive market. As a price-taker, he: can select a price from a wide range of alternatives. can select the lowest price available in the competitive market. can select the average of prices available in the competitive market. cannot affect the price of a good in the market.

cannot affect the price of a good in the market

Perfect price discrimination consists of charging each customer their reservation price. charging each customer based on the marginal cost. basing price in the highest marginal cost the customer is willing to pay. charging each customer the lowest price they are willing to pay.

charging each customer their reservation price.

Several years ago, a group of former undergraduates sued 16 prestigious universities, alleging that they engaged in price fixing by agreeing to limit financial aid, thereby raising the price of attendance. If the accusation were deemed true, the universities would be guilty of: competition policy collusion merging. monopolistic competition.

collusion

Through the income effect, a higher wage causes a: decrease in leisure time. decrease in the quantity of labor supplied. substitution of work for leisure. reduction of work time to zero.

decrease in the quantity of labor supplied.

The marginal private benefit curve is also the: supply curve. marginal external benefit curve minus the marginal social benefit curve. demand curve. marginal personal benefit curve.

demand curve.

A compensating differential is an: adjustment to wages that compensates for lost work due to the use of robotics. adjustment to work hours that allows low-wage employees to earn more. difference in wages that offsets the desirable or undesirable aspects of a job. difference in wages that adjusts for differences in worker productivity.

difference in wages that offsets the desirable or undesirable aspects of a job.

compensating differential is a(n): adjustment to wages that compensates for lost work due to the use of robotics. adjustment to work hours that allows low-wage employees to earn more. • difference in wages that offsets the desirable or undesirable aspects of a job . difference in wages that adjusts for differences in worker productivity.

difference in wages that offsets the desirable or undesirable aspects of a job.

The Rational Rule for Society is to produce that amount of a good where the marginal social benefit of pollution is ____ the marginal social cost of pollution. equal to greater than less than There is no socially optimal amount of pollution.

equal to

Marginal revenue product is the change in revenue from selling an extra item. marginal revenue from hiring an additional worker. extra product produced from spending marginal revenue on inputs. change in revenue from the total production.

extra product produced from spending marginal revenue on inputs.

The marginal product of labor is the amount of extra worker time it takes to produce one extra unit of output. change in output from the slowest worker to the most productive worker. extra output produced by all the firm's employees. extra production that occurs from hiring an extra worker.

extra production that occurs from hiring an extra worker.

When a seller is able to differentiate its product successfully, the seller has a reduction in costs of production. takes its market closer to perfect competition. loses market share. gains market power.

gains market power.

Price discrimination by charging different prices to different groups of people is called group discrimination. price partitioning. segmentation. group pricing.

group pricing.

In a labor market, the quantity is the: wage or amount of money paid. hours of work bought or sold. different types of skills that are sought. number of companies hiring.

hours of work bought or sold.

The accumulated knowledge and skills that make a worker more productive are known as: human capital. labor enhancement. labor factoring. efficiency investment.

human capital.

There is evidence that, despite antidiscrimination laws, discrimination _____ in labor markets. impacts wages exists but has no impact benefits groups that are discriminated against accounts for all differences in wages across groups of workers

impacts wages

When wages ___ if the substitution effect dominates, the quantity of labor supplied will increase; decrease decrease; increase increase; increase decrease; stay the same

increase; increase

The __ determine(s) the wage in a labor market. intersection of the labor demand and labor supply curves difference between the demand for jobs and the supply of jobs positive slope of the demand curve and the negative slope of the supply curve length of the labor demand curve and the labor supply curve

intersection of the labor demand and labor supply curves

When someone can enjoy the benefits of a good without bearing the cost, the good: is subject to the free-rider problem. is excludable and rival. is a nonmarket good. is attractive to manufacturers.

is subject to the free-rider problem.

A monopolistically competitive industry consists of: a few firms, each producing a highly differentiated good. one firm that produces a standardized good. market participants who are all price-takers. many firms producing somewhat differentiated products.

many firms producing somewhat differentiated products.

Bella uses the Rational Rule for Workers, she will keep choosing more work and less leisure until the: value of her production equals her wage. marginal benefit of one more hour of leisure equals the wage. marginal cost of her work equals the value of her production. marginal benefit of one more hour of leisure equals the value of her production.

marginal benefit of one more hour of leisure equals the wage.

corrective tax designed to resolve a negative externality problem is typically set at an amount equal to the ___ cost. marginal social marginal external total externality total social

marginal external

The supply curve of a firm is also its _____ cost curve. average social marginal private marginal external

marginal private

An employer's labor demand curve is equal to the marginal revenue product curve. marginal product curve. marginal revenue curve. rational product curve.

marginal revenue product curve.

The marginal private benefit plus the marginal external benefit equals the ____ benefit. total public total externality marginal social marginal public

marginal social

manufacture reusable water bottles, differentiating themselves by producing bottles made of various materials, such as glass, steel, and plastic, combined with numerous optional features, such as insulation, size, and shape. The market structure is: perfect competition. monopoly. oligopoly. monopolistic competition.

monopolistic competition.

market characterized by many producers producing a similar yet differentiated product would be considered: a monopoly. a duopoly. an oligopoly. monopolistically competitive.

monopolistically competitive.

The Tennessee Valley Authority (TVA) is the sixth-largest power supplier in the United States, supplying hydroelectric energy to power companies in several Southeastern states. In many rural towns, the TVA provides the only source of electricity. The market structure for electricity in these towns is: perfect competition. monopoly. •oligopoly. • monopolistic competition.

monopoly

When a company has market power, it is _____ in its market. one of many small companies not a price-taker a producer of non-differentiated products not able to impact the market equilibrium price

not a price-taker

The options for rideshare transportation in your city are Uber and Lyft. The market structure is: • perfect competition. O monopoly. • oligopoly. monopolistic competition.

oligopoly

which market structure do the actions of a rival have a significant impact on your operations? monopoly monopolistic competition oligopoly perfect competition

oligopoly

When the hurdle method is used to price a product across buyers, only those buyers who want it can buy the product. they can buy different versions of the product with more advanced versions costing more. the seller prices the product based on the amount of difficulty faced in producing it. only those who overcome the obstacle that the seller specifies will get a lower price.

only those who overcome the obstacle that the seller specifies will get a lower price.

A payoff table lists all possible _____, with a row for each _____ and a column for _____. outcomes; of one player's possible outcomes; each of the other player's possible outcomes costs; fixed cost; each variable cost rivals; possible rival; each outcome resulting from competing against each rival outcomes; possible negative outcome; each possible positive outcome

outcomes; of one player's possible outcomes; each of the other player's possible outcomes

Selling the same good at different prices to different buyers is price differentiation. price discrimination. revenue differentiation alternative revenue collection.

price discrimination.

Individuals in a market who take the market price as given are: quantity minimizers. quantity takers. price-takers. price searchers.

price-takers.

Marginal social cost equals marginal _____ cost plus marginal _____ cost. consumer; production government; private private; external public; internal

private; external

A monopoly: produces a product with no close substitutes. is composed of a single buyer and a single seller. is composed of a large number of small firms producing a differentiated product. is composed of a small number of large firms producing a homogeneous product.

produces a product with no close substitutes.

Planet Fitness, a large fitness club franchise, distinguishes itself from competitor gym facilities, such as Gold's Gym, Equinox, 24-Hour Fitness, and CrossFit, by promoting affordable membership prices and a "Judgment Free Zone." This strategy is called: product differentiation. perfect competition. the output effect. collusion.

product differentiation.

The goal of price discrimination is to increase profit by charging each customer the highest price he is willing to pay. profits by raising the demand to sell at higher prices. sales by advertising to gain more customers who are willing to pay more. sales by attracting new groups of customers who are willing to pay more for the product.

profit by charging each customer the highest price he is willing to pay.

When a good is nonrival and nonexcludable, the good is referred to as a(n): free-ride benefit good. external good. private good. public good.

public good.

The labor demand curve in a labor market: • represents workers demanding jobs in the market. represents firms selling jobs in the market. slopes upward. slopes downward.

slopes downward.

the labor supply curve in a labor market: represents firms demanding labor in the market. represents firms selling jobs in the market. slopes upward. slopes downward.

slopes upward.

With a _____ number of sellers in a market, _____ market power tends to exist in the market. smaller; more smaller; less consistent greater; more greater; less consistent

smaller; more

Using observations about the average characteristics of a group to make inferences about an individual member of the group is known as: differential bias. statistical discrimination. prejudice. implicit bias.

statistical discrimination.

When someone can enjoy the benefits of a good without bearing the cost, the good is: subject to the free-rider problem. excludable and rival. a nonmarket good. attractive to manufacturers.

subject to the free-rider problem.

The _________________ measures how people respond to a change in relative prices when the wage rises. substitution effect income effect opportunity cost marginal benefit

substitution effect

A backward-bending labor supply curve entails that at relatively low wages, the ___ effect dominates the ___ effect, and the supply curve has a ___ slope. income; substitution; positive income; substitution; negative substitution; income; positive substitution; income; negative

substitution; income; positive

In a labor market, workers _____ labor, and employers _____ labor. supply; demand demand; supply hire; use use; hire

supply; demand

You are an economist for the state of California, where the government has already implemented a cap-and-trade program for greenhouse gas emissions. However, the California Air Resources Board has identified an additional pollutant it would like to reduce. Working with the Board, your analysis reveals a marginal external cost of $2 but not the socially optimal quantity. Your recommendation is to introduce a: tax equal to marginal external cost. quota equal to the marginal external cost. subsidy equal to the marginal external cost. tradeable permit equal to the marginal external cost.

tax equal to marginal external cost.

Human capital is: the sum total of man-made resources, for example, buildings and equipment, used in production. the accumulated knowledge and skills that make a workforce more productive. the accumulated technological innovations that have made physical capital more productive. labor.

the accumulated knowledge and skills that make a workforce more productive.

In an oligopoly: there are many sellers. there are no barriers to entry. the actions of one firm depend on the actions of other firms. firms produce an output at which MR > P.

the actions of one firm depend on the actions of other firms.

A reservation price is the price you pay a producer to guarantee that a unit of a product will be available when you need it. a lower than normal price that a seller "reserves" for (or makes available to) his best customers. the lowest price at which a seller is willing to make a sale. the highest price that a customer is willing to pay for a product.

the highest price that a customer is willing to pay for a product.

Perfect competition is characterized by: control of a common resource. quality competition. the inability of any one firm to influence price. many firms selling a similar yet distinct product.

the inability of any one firm to influence price.

An efficiency wage improves efficiency when: the increase in worker effort and reduced turnover cover the cost of the higher wage. it is structured so that only the most productive workers receive a higher wage. capital costs are reduced enough to cover wage costs. improved technology accompanies the worker training.

the increase in worker effort and reduced turnover cover the cost of the higher wage.

An employer should hire one more worker if the total benefit exceeds the total cost. the marginal cost is falling. the marginal benefit exceeds the marginal cost. demand is rising.

the marginal benefit exceeds the marginal cost.

For all economies, the extra external benefit accruing to bystanders from one extra unit of production is: the marginal external benefit. the marginal external cost. the optimal corrective tax. a technology spillover.

the marginal external benefit.

For all economies, the extra external cost imposed on bystanders from one extra unit of production is: the marginal external benefit. the marginal external cost. the optimal corrective tax. a technology spillover.

the marginal external cost.

The marginal social cost of a unit of pollution is: the marginal private cost plus marginal external cost from one extra unit of pollution. easy to calculate, since pollution is costly. often overestimated. constant as more of a good is produced.

the marginal private cost plus marginal external cost from one extra unit of pollution.

In a labor market, the wage is: the price of labor. the quantity of labor. what workers pay. what employers receive.

the price of labor.

Game theory is: a view on the development of children's games and toys. the analysis of market forces when there is role reversal for buyers and sellers. the science of making good decisions in situations involving strategic interactions. a view on decision making when clear paths to optimum outcomes are known.

the science of making good decisions in situations involving strategic interactions.

An externality exists when: the side effect of an activity affects bystanders whose interests aren't taken into account. the side effect of an activity affects bystanders, and the market provides incentives to take these affects into account. individual actions are affected by external forces like the loss of U.S. jobs because of competition from abroad. individual actions are affected by government policies (such as taxes) that are externally imposed on the

the side effect of an activity affects bystanders whose interests aren't taken into account.

The benefit of working one more hour is: what you produce during the hour. the leisure time you gain. the experience you gain. the wage you will earn during the hour

the wage you will earn during the hour.

An aluminum mining operation discharges waste products into a river, causing higher costs and discomfort for downstream users of the water for which they are not compensated. In this case: there is underproduction of aluminum. there is overproduction of aluminum. the optimal amount of society's resources is used to produce aluminum. there is an external benefit to society from aluminum production.

there is overproduction of aluminum.

A positive externality is an activity: that generates negative externalities. that benefits domestic firms as a result of the actions of foreign (external) firms. that benefits foreign (external) firms as a result of the actions of domestic firms. whose side effects benefit bystanders.

whose side effects benefit bystanders.

When making labor supply decisions, your options are working or doing housework. working, shopping, or relaxing. working or leisure. working, sleeping, or leisure.

working or leisure.

Which statement describes a positive externality? Edwin dug a pond to enable him to fish, but the pond has contributed to an explosion of mosquitoes in your neighborhood. Edwin has dozens of dogs that dig holes in your yard to bury bones. Edwin buys a run-down house, renovates it, and increases the property values of all the houses in the neighborhood. Liquid waste from Edwin's sheep farm flows into a neighbor's well water.

• Edwin buys a run-down house, renovates it, and increases the property values of all the houses in the neighborhood.

A backward-bending labor supply curve entails that at relatively high wages, the _ and the supply curve has a _ slope. • income; substitution; positive • income; substitution; negative substitution; income; positive substitution; income; negative

• income; substitution; negative

The socially optimal quantity of pollution is: zero. • the quantity at which the marginal social cost of pollution is minimized. • the quantity at which the marginal social benefit of pollution is maximized. • the quantity at which the marginal social cost of pollution equals the marginal social benefit of

• the quantity at which the marginal social cost of pollution equals the marginal social benefit of