Micro Final

Which of the following lists only the factors that would cause a decrease in the supply of an item?

A rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute-in-production

Diminishing marginal benefit:

Is when buying an additional item yields a smaller marginal benefit than the previous item

When plotting a supply curve

The quantity supplied goes on the horizontal axis

The formula for calculating accounting profit is total revenue minus _____ costs.

explicit financial

The two main types of implicit opportunity costs are:

forgone wages and forgone interests

All of the solutions to externality problems involve:

getting buyers and sellers to consider marginal external costs and benefits.

When market leaders produce on a mass scale, new entrants:

have a hard time competing

When new sellers enter a market, existing sellers will:

have less market power

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

quantity= 4; price= $7

Sellers try to avoid the entry of new rivals through the use of demand-side strategies. These demand-side strategies do NOT include:

raising the market demand for the product

When firms in a market with free entry and exit experience economic losses, then:

some sellers will exit the market, reducing average seller losses

The Rational Rule for Sellers says that a seller should sell one more unit of an item if the price is:

Greater than or equal to the marginal cost

In the field of economics, the observation that the living standard of a household is more stable than its income, because people think in terms of their long-term earnings as they spend, is known as:

Permanent Income versus current income

An income level below which a family is defined to be in poverty is known as the:

Poverty line

The producer surplus on a unit sold equals:

Price minus marginal cost

The strong incentive of sellers to deter the entry of new sellers is a major reason that:

most markets are imperfectly competitive

When the typical seller in a market has economic profits, then:

new sellers will enter the market

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.

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

You have a comparative advantage if you can complete a task:

At a lower opportunity cost than anyone else

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

Monopolizing

Which of the following statements is based on normative analysis?

We should protect the environment

Managers can harness market forces by setting up internal markets, which:

Are organized within a company to buy and sell scarce resources

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

Provide training

The price of product C rises by 10%. As a result, the quantity demanded of product D rises by 20%. The cross-price elasticity of demand between product C and product D is _____, and they are _____.

2; substitutes

(Figure: Mia's Demand Curve for Ice Cream) The accompanying graph shows Mia's demand curve for ice cream, how many cones would Mia be willing to buy at $5 per cone?

3 cones

(Figure: Market for Engines) If there is no international trade in this market, the value of the consumer surplus is:

360,000

Compensating differentials lead to:

Higher salaries for more unpleasant jobs

A tax on buyers causes which of the following? (i) a leftward shift of the demand curve (ii) a decrease in quantity sold (iii) an increase in the price buyers pay

(i), (ii), and (iii)

A tax on sellers causes which of the following? (i) a leftward shift of the supply curve (ii) a decrease in quantity sold (iii) an increase in the price buyers pay

(i), (ii), and (iii)

Assume that a country with total income of $160,000 has a population of 10 households whose incomes are listed in Table: Income of Households. What percentage of income is earned by the top quintile of the population?

69%

Table: Income Distribution in Four Countries provides recent data from the World Bank on the distribution of income in four countries. Based on the data, the country with the distribution of income that is closest to equal is:

Bangladesh

What conditions must be met for private bargaining to be effective in resolving an externality?

Bargaining costs must be low, and property rights must be clear.

Specialization will increase output when it is based on:

Comparative Advantage

The costs of working do NOT include what

Could have been bought with the income earned

The statutory burden of a tax is the:

Government-designated burden of a tax payment

(Figure: Market for Coffee) A coffee shop opens next to an existing coffee shop. Which of the following graphs shows the effect of this new coffee shop on the market supply curve for coffee in this area?

Graph A

When there is a shortage of highly skilled workers in a particular region:

Highly skilled workers can negotiate higher salaries

When the absolute value of the price elasticity of demand is less than 1, demand is:

Inelastic

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

It has increased the gap in income significantly

If a seller can create switching costs for its product, then:

It is difficult or costly for the customers to switch to another seller of the product

What is quantity supplied?

It is the amount of an item that a seller is willing to sell at a particular price

Unions are organizations that:

Jointly represents a group of workers in negotiating with employers

Use the data in the table to answer the question. The table provides data on how long it takes Maia and Juanita to mow the lawn and weed the flower beds. Who has a comparative advantage in mowing lawns?

Juanita because she has a lower opportunity cost

A rational buyer will:

Keep buying a product until marginal benefit equals price

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

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

Countries benefit from trade by exporting goods in which their opportunity costs are relatively _____ and importing goods in which their opportunity costs are relatively _____.

Low; high

The marginal revenue product of labor is equal to:

MPL X P

Which of the following is a negative result of redistributing income toward equality?

Work incentives are reduced

The toothpaste aisle at a large store that sells personal care products contains many versions of toothpaste produced by a small number of sellers. This indicates that toothpaste producers are engaging in _____ to _____.

brand proliferation; deter new entrants

Which of the following is NOT a trade cost?

the cost of producing a good

Which of the following is an example of a trade cost associated with a U.S. citizen importing a sweater produced in India?

the cost of the tariff on imported sweaters from India

Adhika is deciding whether to open a company to produce step stools. He should start the company if he expects that:

the price will exceed his average cost

In a market graph, consumer surplus is the area:

Above the price and below the demand curve

As prices _____, they provide useful business intelligence.

Aggregate information

What is collision?

Agreements between sellers to increase their market power

According to diminishing marginal utility, which of the following people would gain the lowest marginal benefit from an extra $100 of income?

Arianna, an actress with an annual household income of $1,500,000

Chin purchases five protein bars at a price of $3 each. The marginal benefit he receives from each bar is $5 for the first bar, $4.50 for the second bar, $4 for the third bar, $3.50 for the fourth bar, and $3 for the fifth bar. The marginal cost of producing the bars is $2 each. What is Chin's consumer surplus on the fifth bar?

$0

(Figure: Market for Engines) According to the figure, if there is international trade in this market, and the world price of an engine is $800, the value of the consumer surplus is:

$250,000

Portia produces and sells headbands. Her marginal cost for one headband is $6, and her average cost is $4. She gains producer surplus only when she sells headbands at a price above:

$6

The price of product A is cut by 30%. As a result, the quantity demanded of product B rises by 40%. The cross-price elasticity of demand between product A and product B is _____, and they are _____.

-1.33; complements

The table contains the monthly demand for soda cans for four students. If these four students make up the entire market, what is the total monthly market demand for soda at $1.50 per can?

148 cans

Price ceilings tend to create shortages when used to

Bring down price in a competitive market

The economic burden of a tax is the:

Burden created by the change in after-tax prices faced by buyers and sellers

Which of the following is a mean-tested social safety net program in the United States?

Earned income tax credit

When the absolute value of the price elasticity of demand is greater than 1, demand is:

Elastic

Which of the following is NOT true of the incidence of poverty in the United States?

Elderly people are more likely to be in poverty

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

Firm C

An efficiency wage is a:

Higher wage paid to encourage greater worker productivity

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

Higher wages

Consideration of the benefits of choosing an occupation should NOT include

If you find it easy

Which of the following is NOT one of the four key reasons that the government provides in-kind benefits rather than cash benefits?

In-kind benefits give the recipient the greatest flexibility to choose what matters the most

Which of the following scenarios illustrates the law of demand?

Kathleen eats more steak when the price is low. and less when the price is high

Mary loves avocados and must consume avocados every week, regardless of the price. Which of the following must be true?

Mary has an inelastic demand for avocados

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

Oligopoly

The Rational Rule for Workers is to work

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

When you calculate marginal costs, they should include:

Only variable costs

Linking your workers' earnings to their performance is called:

Pay-for-performance

In 2017, eBay started charging a 20% value-added tax on fees charged to small businesses in the United Kingdom. Holding all else constant, this would _____ in the United Kingdom.

Raise the prices that eBay sellers charge their customers

The main role of markets is:

Reallocating resources to better use

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

Reduce; the amount of the reduction

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

Shares of McDonald's Stocks

A tax on sellers shifts the:

Supply curve to the left

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

Supply decreases

The marginal benefit minus the marginal cost equals:

The economic surplus

Which of the following is NOT a factor that can shift supply?

The market price of a product

A price ceiling is:

The maximum price that a seller can charge in a market

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

The optometrist labor supply curve shifts leftward

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?

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

Which of the following illustrates a positive externality?

The value of Maria's house rises when the city builds a park nearby, enhancing her view.

One of the market failures caused by market power is

Underproduction

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

Unionized workers earn more

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

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

(Figure: Market for Engines) According to the figure, if there is international trade in this market, and the world price of an engine is $800:

domestic producers will export 300 units

Because _____ profit is calculated based on _____ costs, it allows firm owners to make better decisions about _____.

economic; total; entering and exiting a market

In the United States, the poverty line income:

is adjusted based on household size

Mario's company definitely has economic losses in which of the following situations?

total costs exceeds total revenue

Chin purchases five protein bars at a price of $3 each. The marginal benefit he receives from each bar is $5 for the first bar, $4.50 for the second bar, $4 for the third bar, $3.50 for the fourth bar, and $3 for the fifth bar. The marginal cost of producing the bars is $2.50 each. What is Chin's total consumer surplus from the five bars that he purchased?

$5

(Figure: Profit Margin) What is the profit margin for this firm if it produces a quantity of six?

$7- $4= $3

Which of the following is an example of a quantity quota?

A city enforces zoning laws that restrict the number of housing units

A normal good is:

A good for which higher income causes an increase in demand

(Figure: Market for Sustainable Furniture) The graph depicts the market for furniture made from sustainable, man-made forests. The government wants to encourage buyers to buy such furniture and imposes a price ceiling of $250. What occurs as a result of the price ceiling?

A shortage of 400,000 pieces of furniture

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

Graph B

A market consists of ten similar suppliers that are making the same supply decisions. To find the market supply of these ten suppliers, you:

Multiply the individual supply of one of the suppliers by ten.

Table: Average Income and Distribution of Income Data provides recent data from the World Bank on average income and the distribution of income in four countries. Based on the data in the table, those in the top quintile have the highest average income in which country?

Sri Lanka

Why are supply curves typically upward-sloping?

They slope upward because higher prices lead individual businesses are willing to supply goods and services

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

They would not be able to hire anyone

A good is characterized as _____ when one person's use of the good does not reduce another person's ability to use the same unit of the good.

nonrival

The price of milk at the local grocery store rises by 25%, and the quantity of milk demanded falls by 10%. The absolute value of the price elasticity of demand for milk is _____, and demand is _____.

0.4; inelastic

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

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

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

Graph A

The outcome that is most efficient for society as a whole — including the interests of buyers, sellers, and bystanders — is the _____ outcome.

Socially optimal

A good has a free-rider problem when:

Someone can enjoy the benefits of the good without bearing the costs

Which of the following is LEAST likely to be traded internationally?

Sports arenas

The price of milk at the local grocery store is cut by 15%, and the quantity of milk demanded increases by 10% in response. What is the absolute value of the price elasticity of demand for milk?

0.67

Malia earns a yearly salary of $130,000 in her job and earns $1,000 per year in interest on her savings. After she quits her job to start a company, she uses all her savings to purchase manufacturing equipment for her company. Given the above information and the data summarizing her first year in business in the table, how much economic profit or loss does Malia earn?

$19,000

Use the table to answer the question. What is the equilibrium price in this market?

$9

Which of the following are correct about fixed costs? (i) They do not change with the level of production in the short run. (ii) They include variable costs. (iii) They are present even when the firm is producing zero units. (iv) They are irrelevant to marginal cost.

(i), (iii), (iv)

(Figure: Graph) In the graph, the movement from point J to point K must have been caused by:

A fall in the price of an item

A seller at a farmer's market wants $10 for a bag of 10 apples. You think his price is too high, so you counter with an offer of $6 for the bag. The seller then offers you a much smaller bag of five apples for $6. You bargain again, and the seller lets you buy the 10 apples for $8. This scenario is an example of:

A market in action

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

A monopolistically competitive market

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

A monopolistically competitive market

(Figure: Graph) Refer to the graph to answer the question. The movement from point M to point N represents:

An increase in quantity demanded

Graphically, shortages will always occur:

At prices below the equilibrium price

A shortage occurs when:

Quantity demanded exceeds quantity supplied

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?

The drugs would not have been developed

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

The employers looking to hire programmers

Which of the following would shift the labor supply curve?

The government increases it provision of childcare services

There are four suppliers in the packed meals market. The quantity of packed meals that each one is willing to supply per week at various prices is provided in the accompanying table. What is the change in the market supply for packed meals when the price falls from $6.25 per meal to $6.00 per meal?

The quantity supplied in the market falls by 149,000

There are four suppliers in the packed meals market. The quantity of packed meals that each one is willing to supply per week at various prices is provided in the accompanying table. What is the change in the market supply for packed meals when the price rises from $6.25 per meal to $6.50 per meal?

The quantity supplied in the market rises by 152,000

You eat M&Ms every day. When you go to the store to buy some, you find that M&Ms are more expensive than they were last month. Which of the following could explain why M&Ms are more expensive?

The supply of cacao beans, used to produce chocolate, has fallen around the world

The Rational Rule for Employers implies that they keep hiring until

The wage equals the marginal revenue product of the last worker hired

You're shopping online, and you place an item in your virtual cart. Two days later, you return to the virtual cart to check out and find that the item is now more expensive. Assuming that the market is competitive, what could explain the price increase?

There is a shortage of the product

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

lower the market output

When buyers in a market have market power, then the

product price is lower

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

wage; hours of labor

(Figure: Supply Curve) The graph shows the supply curve for jars of laundry detergent. If 18 units are sold at a price of $20, what is the producer surplus on the last jar sold?

$0

(Figure: Market for TVs 2) According to the figure, if there is international trade in this market, and the world price of a television is $500, buyers and sellers will make exchanges at a price of _____ because buyers will refuse to pay _____ than the world price.

$500; more

The United Kingdom plans to end the use of gas-powered and diesel-powered cars by the year 2040. At the same time, car manufacturers, such as General Motors and Nissan, are increasing the number of electric car models they produce. Based on this information, which of the following statements is/are correct? (i) If the supply of new electric cars is greater than the demand for new electric cars, then the price of electric cars will fall in the future.(ii) The demand for gasoline will fall in the future. (iii) The demand for electricity will rise in the future. (iv) The demand for diesel will rise in the future.

(i), (ii), and (iii)

Which of the following five scenarios illustrate markets in action? (i) You rent a book at the university bookstore. (ii) You bargain at a street stall. (iii) You mow your own lawn. (iv) You get a manicure at a nail salon. (v) You grow your own vegetables and consume them yourself.

(i), (ii), and (iv)

If income rises by 20% and the quantity demanded of an item rises by 10%, the income elasticity of demand for this item is:

0.5

The price of a dozen eggs falls from $3 to $2.70. In response to this price change, the quantity supplied of eggs falls from 100,000 dozen eggs to 75,000 dozen eggs. What is the price elasticity of supply for eggs?

2.7

Consider the data in the table. The price of gasoline is $3.99 per gallon at the gas station. If Rexhall Fuel Supplies is a rational seller, how many gallons of gasoline should this seller be willing to sell?

20 million gallons per week

Figure: Spice King Burgers' Supply Curve) Take a look at Spice King Burgers' supply curve for burgers. How many burgers will they supply at a market price of $1.50 per burger?

200 Units

Use the table to answer the question. What is the equilibrium quantity in this market?

300 units

(Figure: Market for TVs 2) Suppose that the world price of TVs is $400, and the government imposes a $100 tariff. According to the figure, domestic consumers purchase _____ units from domestic producers and _____ units from foreign producers after the tariff.

40,000; 30,000

(Figure: Market) Use the graph to answer the question. The graph shows the marginal social cost, demand, and supply curves in the jigsaw puzzle market. What are the socially optimal quantity and price in this market?

4; $8

Which of the following taxes is regressive? Raj pays a 10% tax on the first $10,000 he earns plus a _____ tax on any additional income.

5%

(Figure: Market) Use the graph to answer the question. The graph shows the marginal social cost, demand, and supply curves in the jigsaw puzzle market. If market forces prevail, this market will produce and sell _____ units of output at a price of _____.

6; $6

(Figure: Market 3) Use the graph to answer the question. The graph shows the marginal social cost, supply, and demand curves in the hand sanitizer market. At what quantity could the government set a quota to control this externality?

8

Which tax is regressive? Arturo pays an 8% tax on the first $9,000 he earns plus _____ tax on any additional income.

A 5%

(Figure: Graph) Refer to the graph to answer the question. In the graph, the movement from point W to point P represents:

A decrease in demand

Which of the following statements is true?

A firm with economic profits will also have accounting profits

A subsidy is a:

A government payment designed to encourage particular purchases or productive activities

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

A higher wage

An externality is defined as:

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

Which of the following would be both nonrival and nonexcludable?

A siren tornado warning system

A tariff is a:

A tax on imported goods

A binding price floor is:

Always above the equilibrium price

Which of the following scenarios depicts a seller who is following the Rational Rule for Sellers?

American Airlines determines the marginal cost of an extra passenger to be $75 and sells a discount seat for $250

Quantity demanded is on the horizontal axis when you plot a demand curve and shows the:

Amount of a good that a person is willing to buy at each price

Marjean walks to work every day along a busy road. As she does so, she breathes in the fumes of many cars, often arriving at work coughing. The economic term for the impact of the cars on Marjean is:

An externality

(Figure: Market 5) The graph shows the market for teddy bears. When the market produces and sells nine teddy bears, the deadweight loss is represented by the:

Area between the demand and supply curves between quantities of 5 and 9

People gain consumer surplus when they purchase an item:

At a price below the value of the benefit they receive from the item

Which of the following benefits could a company gain from using internal markets?

Better allocation of its resources and more accurate predictions

Argentina and Chile both produce copper and timber. If Chile produces copper much more efficiently than Argentina and timber slightly more efficiently than Argentina, _____ can benefit from trading copper and timber with each other.

Both countries

Russia and Kazakhstan both produce horses and oil. If Kazakhstan is much more efficient than Russia in the production of horses and slightly more efficient than Russia in the production of oil, _____ can benefit from trading horses and oil with each other.

Both countries

To get maximum output, you should allocate each task to the person who:

Can do the task with the lowest opportunity cost

You have an absolute advantage in producing a product if you:

Can produce the product using the fewest inputs

When the economic surplus in a market is less than it would be if the market were efficient, the market is experiencing:

Deadweight loss

In 2016, Amazon began charging a 5.75% sales tax on products it sells in the District of Columbia. Holding all else constant, the effect of this tax would be to _____ in the District of Columbia.

Decrease Amazon sales

A subsidy for buyers of a product shifts the:

Demand curve to the right

The cross-price elasticity of demand measures how responsive the:

Demand for one good is to a change in the price of another good

Buyers bear a smaller incidence of the tax when:

Demand is more elastic than supply

An equilibrium price is:

Determined by the intersection of the demand and supply curves

A bakery hires a baker who can make 15 cakes per day. The bakery then decides to hire a second baker who will use the kitchen at the same time as the first baker. The bakery finds that the second baker can produce only an additional nine cakes per day. What concept does this scenario illustrate?

Diminishing Marginal Product

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

Diminishing marginal product

If Bishan wants to capitalize on comparative advantage in his life, then he should:

Do more of what he is relatively good at then trade for other things

Which of the following is consistent with the view that "fairness" means equality of outcomes?

Equal incomes

As a result of technological innovation, automated water pumps are being installed on the farms of Kenyan tomato farmers. As a result of the increased use of automated water pumps, the equilibrium price of tomatoes will:

Fall, due to a rise in supply

(Figure: Demand for Bus Rides) The city of Vaughan in Ontario, Canada, opened a new subway line that extended the existing subway system between the greater Toronto area and the city of Vaughan. The route previously only had bus service. Which of the following graphs depicts the effect you would expect to see on the demand for bus rides on this route after the introduction of the subway?

Graph A

(Figure: Market for Printing Paper) Which of the following graphs illustrates what we expect to see in the market for printing paper if the price of printing paper rises?

Graph C

(Figure: Market for Apple Computers) Dell and Apple are competitors in the computer market. Which graph illustrates the effect of a rise in the price of Dell computers on the demand for Apple computers?

Graph D

(Figure: Market for Luxury SUVs) Which of the following graphs shows what will happen to the supply curve for luxury SUVs, if economists predict an increase in demand for these vehicles?

Graph D

If you need to make a decision and all the information needed to make a good decision is not available, then you:

Have a knowledge problem

Which of the following is NOT one of the three questions that should guide discussions and policies related to the redistribution of income that were presented in the chapter?

How long will it take to redistribute income?

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

How many workers to hire

The income effect measures

How people's choices change when they have more income

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

Human Capital

Which of the following statements describes the Coase Theorem?

If bargaining is costless, and property rights are clearly established and enforced, then externality problems can be solved through private bargaining.

Which of the following is a positive economic statement?

If the government raises taxes, people will have less income available for purchases and savings

The interdependence principle:

Implies that buyers decisions are affected by many factors other than the price of an item

When people focus on their comparative advantage and then trade for other things, they:

Improve their standard of living or increase their leisure time

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

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

If demand is _____, a higher price yields _____ total revenue.

Inelastic; higher

When you get hired for a well-paying job, you will most likely view older used cars as

Inferior good

In 2018, the unemployment rate in the United States went as low as 3.7%, as measured by the Bureau of Labor Statistics. This historically low level of unemployment occurred simultaneously with a large trade deficit. This provides evidence against which of the following arguments against international trade?

International trade may lead to job loss.

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:

Invests in job-specific skills

Suppose that one hour of labor in Singapore can produce 20 computers or 40 cellphones. Further, suppose that one hour of labor in Ireland can produce 10 computers or 15 cellphones. _____ has a comparative advantage in the production of computers. _____ has a comparative advantage in the production of cellphones.

Ireland; Singapore

When the definition of poverty focuses on relative poverty, a person is in poverty if the household income is:

Is in the bottom 10% of household incomes in the nation

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

Left because employers are more expensive to the firm

The accompanying table provides data for five different oatmeal cookie sellers. Out of the sellers listed, who all are following the law of supply?

Len, Ren, and Jen

The three sources of discrimination do NOT include:

Malevolent Bias

The marginal revenue from hiring an additional worker is known as

Marginal Revenue Product

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

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

A quantity regulation is a:

Minimum or maximum quantity that can be sold

Suppose the price of gasoline rises. As time passes, people adjust to the higher price, and the demand for gasoline becomes:

More elastic

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

More productive workers may be forgone in order to hire less productive workers who have perferred characteristics

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:

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

Michelle owns the largest florist shop in her town. Each week, she orders a truckload of flowers from the flower wholesaler. The other two florists in town order only one-third as many flowers. Because Michelle's order fills the delivery truck, the wholesaler sells flowers to her at a lower price than the other florists must pay. How will this situation impact potential new entrants?

New florists will be discouraged from entering the market because of the difficulty of competing on cost

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

Nonwage benefits increase for social workers

Statements about what option should be chosen are _____ statements.

Normative

A government leader determines that the 5% unemployment rate is too high. She asks her staff to research policy options to reduce the rate and a few weeks later is given four options. Each option would reduce the rate by a different amount and at a different cost. The leader studies the options and chooses the one she feels is best for the country. In order, what types of analysis were used in this three-stage chain of events?

Normative; positive; normative

By contrast with a market that produces the socially optimal output, a market with negative externalities will:

Overproduce

A prediction market is a market where:

Payoffs are linked to whether an uncertain event occurs

When the absolute value of the price elasticity of demand is infinite, demand is:

Perfectly elastic

The price elasticity of demand for a good with a vertical demand curve is:

Perfectly inelastic

Analysis that describes what would happen if various actions were taken is _____ analysis.

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?

Positive

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

Prejudice

Which of the following is NOT a strategy used by a company to "lock-in" customers to ensure demand for its product?

Pressuring the government to require a license for entry into the market

An import is a good or service:

Purchased from a foreign seller

Graphically, the equilibrium quantity can be identified as the:

Quantity corresponding to the intersection of the demand and supply curves

Which of the following is NOT a cost of the redistribution of income?

Reduced marginal benefits to extra income

If an item is a necessity rather than a luxury, its demand curve will be:

Relatively steep

Taking the absolute value of the income elasticity of demand is incorrect because it would:

Remove the ability to tell whether the product is an inferior good or a normal good

Internal markets, which are markets that managers set up within their organization, are:

Set up to allocate resources of a company more efficiently, often not using real money

You are given data on four products — toothpaste, shampoo, soap, and laundry detergent. The absolute value of the price elasticity of demand for toothpaste is 4. The absolute value of the price elasticity of demand for shampoo is 0.2. The absolute value of the price elasticity of demand for soap is 0.5. The absolute value of the price elasticity of demand for laundry detergent is 2. Which product has the most inelastic demand?

Shampoo

Which of the following is a social insurance program in the United States?

Social Security

The cash-assistance, goods, and services provided by the government to better the lives of those at the bottom of the income distribution are known as the:

Social safety net

AN export is a good or service:

Sold to a foreign seller

Government social insurance programs are funded by:

Taxes and fees that are assessed on workers and employers specifically for each program

(Figure: Shift in Supply 1) Use the figure to answer the question. Which of the following events would lead to a shift of the supply curve from Old supply to New supply?

Technological advance in production techniques

The tragedy of the commons is the:

Tendency to overconsume common resources

An individual demand curve is a graph:

That plots the quantity of an item that someone plans to buy, at each price

Which principle helps buyers and sellers make decisions about whether to trade?

The Cost-benefit Principle

Paint and paintbrushes are complements. If the price of paint rises, we can expect:

The demand for paintbrushes to decrease

When there is a shortage of highly skilled workers in a particular region, the:

The demand for skills education increases

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?

The discount effect would be smaller for a change from 100 to 101 units than 1000 to 1001 units

A market's deadweight loss is calculated as:

The economic surplus at the efficient quantity minus the economic surplus at the actual quantity

A binding price floor in a market is removed. Which of the following is likely to occur as a result?

The market price will fall

A downward-sloping demand curve implies:

There is an inverse relationship between price and quantity demanded

If a store runs a sale on a product to clear out its stock, we can conclude that:

There was a surplus of the product in the store

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?

Three

Why would a company set up internal markets?

To solve the knowledge problem

Variable costs are the costs that

Vary with the quantity of output produced

The opportunity cost of working is

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

An equilibrium in a market occurs:

When the quantity supplied equals the quantity demanded

Suppose that you have a pumpkin stall at a farmer's market, and the Halloween season arrives. You know that your customers will want to buy many pumpkins to decorate their houses and make pumpkin pies. Which of the following is a likely result of this scenario?

You can charge a higher price per pumpkin

(Figure: Market for Engines) According to the figure, if there is international trade in this market, and the world price of an engine is $1,000:

domestic producers will export 600 units

The marginal private benefit is the:

extra benefit enjoyed by the buyer of one extra unit of a good or service.

As output rises, average fixed costs:

fall

Suppose the percentage change in newspapers demanded for any price change is infinite. The absolute value of the elasticity of demand for newspapers is _____, and demand is _____.

infinity; perfectly elastic

When government regulations are influenced by lobbyists for the producers in a market, the regulations often:

make it difficult for new producers to enter the market

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

marginal revenue product of; increase

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

not a price-taker

The Rational Rule for Society is that society should produce another unit of a good if:

the marginal social benefit exceeds the marginal social cost.

(Figure: Imports and Exports) During the 2008 to 2009 financial crisis, imports as a share of GDP fell in the United States. Which of the following could explain this phenomenon?

the percentage decrease in imports was greater than the percentage decrease in GDP

Externalities tend to occur because decision makers consider _____ and do NOT consider _____.

their own costs and benefits; the effects of their actions on others

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

there is only one seller

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

two units; $450