Microeconomics Ch. all previous, 15, 20, 17, 18 - Quiz Answers/Notes/Terminology [Final Exam]

(Ch. 15 Notes - Understand) Classifying Industries and Markets in Practice (The North American Industry Classification System; Empirical Measures of Industry Structure)

Classifying Industries and Markets in Practice Important: An industry seldom fits neatly into one category or another. Think of these market structures as lying on a continuum. The North American Industry Classification System North American Industry Classification System (NAICS) is an industry classification system that categorizes industries by the type of economic activity and groups firms with like production processes Empirical Measures of Industry Structure The concentration ratio is the value of sales by the top firms of an industry stated as a percentage of total industry sales The Herfindahl-Hirschman index is the sum of the squared value of the individual market shares of all firms in the industry Because it squares market shares, the Herfindahl index gives more weight to firms with large market shares than does the concentration ratio measure Rules of thumb: HHI < 1,500 => competitive marketplace 1,500 < HHI < 2,500 => moderately concentrated marketplace HHI > 2,500 => highly concentrated marketplace

(Ch. 15 Quiz) (Q14) The value of sales by the top firms of an industry stated as a percentage of total industry sales is called the ____________________.

Concentration Ratio

(Ch. 17 Notes - Terminology) Marginal Physical Product (MPP):

The additional units of output that hiring an additional worker will bring about.

(Ch. 17 Notes - Understand) Appendix: Derived Demand (The Firm's Decision to Hire)

• The demand for resources is derived from the demand for the products that the resources help produce. Ex. A repair shop hires mechanics because of their customers' demand for maintenance and repair services. • A change in product demand will cause demand for the resources used to produce the product to change in the same direction. • A change in productivity of the resource will alter resource demand. • Productivity of a resource rises, demand for the resource will rise. • A change in price of related inputs will alter demand for a resource. The following will increase resource demand: • an increase in a substitute input price • a decrease in a complimentary input price The following will decrease resource demand: • a decrease in a substitute input price • an increase in a complimentary input price MARGINAL REVENUE PRODUCT • Profit-maximizing firms will hire additional units of a resource up to the point where the marginal revenue product of the resource equals its price. • Marginal revenue product (MRP): Change in total revenue from the employment of an additional unit of a resource. MRP = Marginal Product x Marginal Revenue Marginal Product = change in output / change in variable input Marginal Revenue = change in revenue / change in output

(Ch. 17 Notes - Understand) The Derived Demand for Labor (Factors Influencing the Elasticity of Demand for Labor; Labor as a Factor of Production)

*refer to figure Factors Influencing the Elasticity of Demand for Labor Four factors that influence the elasticity of demand for labor are: • The elasticity of demand for the firm's good • The relative importance of labor in the production process •The possibility, and cost, of substitution in production •The degree to which the marginal productivity falls with an increase in labor Labor as a Factor of Production The traditional factors of production are land, labor, capital, and entrepreneurship The labor market includes labor and entrepreneurship Entrepreneurship refers to labor services that require high degrees of organizational skills, concern, oversight responsibility, and creativity Days of entrepreneurship can be equivalent to weeks and months of non-entrepreneurial labor

(Ch. 15 Notes - Terminology) Cartel:

A combination of firms that acts as if it were a single firm.

(Ch. 17 Notes - Terminology) Derived Demand Curve for Labor:

A curve that shows the maximum amount of labor, measured in labor hours, that a firm will hire.

(Ch. 15 Notes - Terminology) Oligopoly:

A market structure in which there are only a few firms and firms explicitly take other firms' likely response into account; there are often significant barriers to entry.

(Ch. 15 Notes - Terminology) Contestable Market Model:

A model of oligopoly in which barriers to entry and barriers to exit, not the structure of the market, determine a firm's price and output decisions.

(Ch. 20 Notes - Terminology) Nash Equilibrium:

A set of strategies for each player in the game in which no player can improve his or her payoff by changing strategy unilaterally.

(Ch. 20 Notes - Terminology) Payoff Matrix:

A table that shows the outcome of every choice by every player, given the possible choices of all other players.

(Ch. 15 Notes - Terminology) Implicit Collusion:

A type of collusion in which multiple firms make the same pricing decisions even though they have not explicitly consulted with one another.

(Ch. 20 Notes - Terminology) Prisoner's Dilemma:

A well-known game that demonstrates the difficulty of cooperative behavior in certain circumstances.

(Ch. 15 Notes - Understand) The Distinguishing Characteristics of Oligopoly

An oligopoly is a market structure in which there are only a few firms and firms explicitly take other firms' likely response into account. • Made up of a small number of firms in an industryThis makes competition is personal (U.S. aluminum => 3 large producers; CPAs => "big 6"; autos => "big 3") • In any decision a firm makes, it must take into account the expected reaction of other firms•Companies can sell homogeneous or differentiated products-homogenous: steel, zinc, copper, aluminum, lead, cement, industrial alcohol-differentiated: automobiles, tires, household appliances, electronics equipment • Oligopolistic firms are mutually interdependent • Oligopolies can be collusive or noncollusive-collusion occurs whenever firms in an industry reach an agreement to fix prices, divide up the market, or otherwise restrict competition among themselves examples of collusions: OPEC, DeBeers • Firms may engage in strategic decision making where each firm takes explicit account of a rival's expected response to a decision it is making -can have 1. economies of scale (aircraft, rubber, cement) 2. control of raw materials (gold, silver, copper) 3. patents (electronics, chemicals, photographic equipment, office machines, pharmaceuticals)

(Ch. 15 Notes - Understand) Antitrust Policy (Judgment by Performance or Structure?)

Antitrust Policy: Judgment by Performance or Structure? Antitrust policy is the government's policy toward the competitive process There are two competing views of competition: Judgment by Performance: We should judge the competitiveness of markets by the performance (behavior) of the firms in the market Judgment by Structure: We should judge the competitiveness of markets by the structure of the industry Judging Markets by Structure or Performance: The Reality - Judging by structure is practical though seemingly unfair - If a firm is competing so successfully that all the other firms leave the industry, the successful firm will be a monopolist - Judging by performance, each action of a firm must be analyzed on a case-by-case basis, which is difficult to do - Structure and performance criteria have ambiguities; there are no definitive criteria for judging whether a firm has violated the antitrust statutes

(Ch. 17 Quiz) (Q13) The concept of ____________________ looks at the demand for factors of production by firms, which depends on consumers' demands.

Derived Demand

(Ch. 17 Notes - Understand) Determination of Wages (Introductory comments;Fairness and the Labor Market)

Determination of Wages *refer to figure Supply and demand forces strongly influence wages, but they do not fully determine wages Real-world labor markets are filled with examples of individuals or firms who resist these supply and demand pressures: Labor unions Professional associations Agreements among employers Fairness and the Labor Market Social and political views of fairness play a role in wage determination Efficiency wages are wages paid above the going market wage to keep workers happy and productive Comparable worth laws mandate comparable pay for comparable work Living wage laws require employers to pay a worker a wage that would support a family of four at the poverty level

(Ch. 17 Notes - Understand) Discrimination and the Labor Market (Three Types of Direct Demand-Side Discrimination; Institutional Discrimination)

Discrimination and the Labor Market The three types of demand-side discrimination are: • Discrimination based on individual characteristics that affects job performance ex. only allowing board-certified surgeons to practice at a hospital • Discrimination based on correctly perceived characteristics of the group ex. young workers may not have the life experience to lead a large multinational corporation • Discrimination based on individual characteristics that do not affect job performance or are incorrectly perceived ex. a qualified person who may be of an ethnicity the hiring manager does not like Institutional Discrimination (From a website) An employer cannot discriminate against a single person on the basis of his or her race, religion, national origin, gender expression, family status or age. Discrimination at work against an individual can be easy to discover and identify.

(Ch. 20 Notes - Terminology) Game Theory:

Formal economic reasoning applied to situations in which decisions are interdependent.

(Ch. 20 Quiz) (Q10) ____________________ refers to formal economic reasoning applied to situations in which decisions are interdependent.

Game Theory

(Ch. 15 Quiz) (Q13) ____________________ is a type of collusion in which multiple firms make the same pricing decisions even though they have not explicitly consulted with one another.

Implicit Collusion

(Ch. 17 Notes - Terminology) Comparable Worth Laws:

Laws mandating comparable pay for comparable work.

(Ch. 17 Quiz) (Q14) ____________________ refers to the marginal revenue a firm expects to earn from selling an additional worker's output.

Marginal Revenue Product

(Ch. 15 Notes - Understand) Models of Oligopoly Behavior (The Cartel Model; The Contestable Market Model; Comparison of the Contestable Market Model and the Cartel Model)

Models of Oligopoly Behavior There is no single model of oligopoly behavior An oligopoly model can take two extremes: • The Cartel Model is when a combination of firms that acts as if it were a single firm • The Contestable Market Model is a model of oligopoly in which barriers to entry and exit, not market structure, determine price and output decisionsBasic Dilemma... if a cartel is successful in raising prices then the higher price encourages: 1. Existing companies to cheat and produce more secretly to maximize revenue, and 2. New companies to enter the marketBoth of these put downward pressure on price, threatening the cohesion of the cartel The Cartel Model A cartel is a combination of firms that acts as if it were a single firm; a cartel is a shared monopoly If oligopolies can limit the entry of other firms, they can restrict profit to a level that maximizes profits for the cartel Output quotas are assigned to individual member firms so that total output is consistent with joint profit maximization Each member must hold its production below what would be in its own interest were it not to collude with the others The Contestable Market Model The contestable market model is a model of oligopoly in which companies use pricing to create barriers to entry. Even if the industry contains only one firm, it will set a competitive price if there are no barriers to entry. Comparing Contestable Market and Cartel Models The cartel model is appropriate for oligopolists that collude, set a monopoly price, and prevent market entry The contestable market model describes oligopolies that set a competitive price and have no barriers to entry Oligopoly markets lie between these two extremes Both models use strategic pricing decisions where firms set their price based on the expected reactions of other firms

(Ch. 15 Quiz) (Q11) A(n) ____________________ is a market structure in which there are only a few firms and firms explicitly take other firms' likely response into account; there are often significant barriers to entry.

Oligopoly

(Ch. 20 Quiz) (Q2) A table that shows the outcome of every choice by every player, given the possible choices of all other players is called a(n) ____________________.

Payoff Matrix

(Ch. 15 Notes - Terminology) Strategic Decision Making:

Taking explicit account of a rival's expected response to a decision you are making.

(Ch. 20 Notes - Understand) Game Theory and the Economic Way of Thinking (The Prisoner's Dilemma; Dominant Strategies and Nash Equilibrium)

The Prisoner's Dilemma The Prisoner's Dilemma is a well-known two-person game that demonstrates the difficulty of cooperative behavior in certain circumstances ex. Two criminals are brought and interrogated separately. The police know they committed a serious crime that can carry up to 10 years in prison. If neither of them confesses, the police have only enough evidence to charge each with a minor crime for which they serve 6 months. If they confess the police have the evidence to prosecute them for the serious crime. The police make the following offer to each: "If both you and the other prisoner confess, instead of being sentenced to the maximum 10 years in prison, the two of you will each serve only 5 years in jail." "If you confess but the other prisoner doesn't confess, in exchange for your serving as a witness for the prosecution, we will drop all charges and you will be set free. If, however, you don't confess and the other does, you will be sentenced to the maximum 10 years in prison. If neither confesses, both will be charged with the lesser felony and serve 6 months." The options are laid out in the payoff matrix which is a table that shows the outcome of every choice by every player, given the possible choices of all other players The payoff matrix has three elements: - Players - Strategies - Payoffs Dominant Strategies and Nash Equilibrium A Dominant Strategy is a strategy that is preferred by a player regardless of the opponent's move A Nash Equilibrium is a set of strategies for each player in the game in which no player can improve his or her payoff by changing strategy unilaterally A Nash Equilibrium doesn't have to be the solution that is jointly best for all players

(Ch. 17 Notes - Terminology) Derived Demand:

The demand for factors of production by firms, which depends on consumers' demands.

(Ch. 15 Notes - Terminology) Antitrust Policy:

The government's policy toward the competitive process.

(Ch. 17 Notes - Terminology) Marginal Revenue Product (MRP):

The marginal revenue a firm expects to earn from selling an additional worker's output.

(Ch. 15 Notes - Terminology) Concentration Ratio:

The value of sales by the top firms of an industry stated as a percentage of total industry sales.

(Ch. 17 Notes - Terminology) Efficiency Wages:

Wages paid above the going-market wage to keep workers happy and productive.

(Ch. 17 Notes - Understand) The Supply of Labor (Real Wages and the Opportunity Cost of Work; The Supply of Labor and Nonmarket Activities; Income Taxation, Work, and Leisure)

Work and the Labor Market • A labor market is a factor market in which individuals supply labor services for wages to individuals and firms that demand labor services•The labor supply choice is between nonmarket activities and legal market activities • Incentive effect is how much a person will change hours worked in response to a change in the wage rate • Economists focus on the incentive effect when considering an individual's choice of whether and how much to workWork and the Labor Market • A labor market is a factor market in which individuals supply labor services for wages to individuals and firms that demand labor services•The labor supply choice is between nonmarket activities and legal market activities • Incentive effect is how much a person will change hours worked in response to a change in the wage rate • Economists focus on the incentive effect when considering an individual's choice of whether and how much to work Income Taxation, Work, and Leisure Taxes reduce the net wage of individuals, reducing the incentive to work An increase in the marginal tax rate is likely to reduce the quantity of labor supplied EU countries, which have relatively high marginal tax rates, are struggling with the problem of providing incentives for people to work For welfare recipients, the tax penalties for working create a great incentive to not work or to work "off the books"

(Ch. 15 Quiz) (10) Which of the following is an argument in favor of judging competitiveness by performance rather than structure? a. Under the judgment by structure criterion, a firm may be breaking the law if it does what it's supposed to be doing: producing the best product it can at the lowest cost b. judgment by performance requires that each action of a firm be analyzed on a case-by-case basis, which is very time-consuming and expensive c. Courts know little economic theory d. structure can be a predictor of future performance

a. Under the judgment by structure criterion, a firm may be breaking the law if it does what it's supposed to be doing: producing the best product it can at the lowest cost

(Ch. 17 Quiz) (Q17) Which of the following will not shift the demand for labor to the right? a. an increase in the wage rate b. an increase in the demand for output c. an increase in the competitiveness of an industry d. an increase in the price of a competing input

a. an increase in the wage rate

(Ch. 15 Quiz) (Q16) When OPEC reduces output to keep prices high, OPEC is acting as a: a. cartel d. price taker c. producer moving along a supply curve, cutting output as price falls d. producer in a contestable market

a. cartel

(Ch. 17 Quiz) (Q4) Demand-side discrimination occurs when: a. employers pay women less than men for doing the same job b. employers hire a man who is more qualified than a woman c. women postpone having children in order to succeed professionally d. women remain in low-paying jobs because of family responsibilities

a. employers pay women less than men for doing the same job

(Ch. 15 Quiz) (Q21) For a cartel to be successful in increasing economic profits for its members: a. entry of new firms must be blocked b. price must be set equal to marginal cost c. price must be set equal to average total cost d. individual firms must be encouraged to adjust output so as to maximize their own profits at the cartel price

a. entry of new firms must be blocked

(Ch. 15 Quiz) (Q17) In the market for bank credit a large bank sometimes announces a change in interest rates. After the changes in interest rates are announced, other banks in the industry usually react by changing their rates in the same way. This is an example of: a. implicit collusion b. the kinked demand curve model c. monopolistic competition d. a cartel

a. implicit collusion

(Ch. 17 Quiz) (Q20) Firms pay efficiency wages because these wages: a. increase worker productivity b. increase worker rivalry c. maximize short-run profits d. minimize short-run costs

a. increase worker productivity

(Ch. 15 Quiz) (Q9) A firm could be guilty of antitrust violations using the judgment by structure criteria despite: a. producing the best product it could at the lowest possible cost b. restraining trade through cartels c. controlling only 10 percent of the market d. pricing goods above the competitive price

a. producing the best product it could at the lowest possible cost

(Ch. 15 Quiz) (Q7) Judgment by performance means that the competitiveness of a market is determined by: a. the actual behavior of firms in the market. b. the number of firms in the market. c. technological considerations. d. the structure of the industry.

a. the actual behavior of firms in the market.

(Ch. 17 Quiz) (Q21) Comparable worth laws are laws that mandate comparable pay for: a. people with comparable levels of seniority b. everyone c. comparable work d. people with comparable abilities

c. comparable work

(Ch. 15 Quiz) (Q8) When judging the competitiveness of markets by the size and number of firms in that market, one is using the: a. "judgment by antitrust" criteria b. "judgment by structure" criteria c. "judgment by merger" criteria d. "judgment by performance" criteria

b. "judgment by structure" criteria

(Ch. 17 Quiz) (Q18) An increase in the wages of truck drivers might be explained by which of the following factors? a. a reduction in the demand for transportation b. an increase in shipments in the retail and wholesale industries c. an increase in the price of gasoline d. a reduction in the price of rail transportation

b. an increase in shipments in the retail and wholesale industries

(Ch. 15 Quiz) (Q4) If an industry has a Herfindahl index of 3,000, the contestable market model probably would predict that the industry would be more likely to have a: a. competitive price b. competitive price if there are no barriers to entry c. monopolistic price d. monopolistic price if there are no barriers to entry

b. competitive price if there are no barriers to entry

(Ch. 20 Quiz) (Q4) The formal game theory model assumes that: a. the dominant firm in the industry will set product price and other firms will follow b. each player tries to anticipate the reaction of his or her rivals when making a decision c. markets are contestable when no barriers to entry exist d. each player ignores the possible reaction of his or her rivals when making a decision

b. each player tries to anticipate the reaction of his or her rivals when making a decision

(Ch. 17 Quiz) (Q7) The marginal revenue product of an input tends to decrease as: a. the price of output increases b. more of the input is used c. productivity increases d. the price of the input decreases

b. more of the input is used

(Ch. 15 Quiz) (Q12) Which of the following market structures does not have predictable price and output decisions at which the firms will arrive rationally? a. perfect competition b. oligopoly c. monopoly d. monopolistic competition

b. oligopoly

(Ch. 20 Quiz) (Q5) Taking explicit account of a rival's expected response to a decision you are making is called: a. monopolistic decision making b. strategic decision making c. competitive decision making d. economic decision making

b. strategic decision making

(Ch. 17 Quiz) (Q16) The demand for labor is a derived demand because: a. many workers are self-employed b. the demand for labor comes from the demand for output c. the demand for output comes from the demand for labor d. the income workers earn adds to the demand for output

b. the demand for labor comes from the demand for output

(Ch. 15 Quiz) (Q20) The contestable market model of oligopoly bases pricing and output decisions on: a. market share b. the threat of new entrants into the market c. the degree of product differentiation d. market structure

b. the threat of new entrants into the market

(Ch. 17 Quiz) (Q2) All of the following are possible explanations for the fact that on average women earn lower wages than men in the United States except: a. women are discriminated against in labor markets b. women are more productive than men on average c. women enter and leave the labor force more frequently than men, causing them on average to have less experience and a lower productivity than men d. women choose to work in low-wage industries

b. women are more productive than men on average

(Ch. 15 Quiz) (Q3) The top four firms in the industry have 10 percent, 8 percent, 8 percent, and 6 percent of the market. The four-firm concentration ratio of this market is: a. 8 b. 264 c. 32 d. 66

c. 32

(Ch. 17 Quiz) (Q8) Refer to the table shown (refer to figure in folder) The marginal physical product of the sixth worker is _____, and the average product of six workers is _____. a. 15; 6 b. 13; 2 c. 6; 15 d. 2; 13

c. 6; 15

(Ch. 20 Quiz) (Q9) Don and Susanne have both been accused of insider trading. Don knows that if he confesses while Susanne keeps silent, he will receive a 1-month jail sentence. He also knows that if Susanne confesses and he keeps silent, he will receive a 12-month jail sentence. If neither of them confesses, there will be insufficient evidence to convict either of insider trading, but there is enough evidence to convict each of them individually of obstructing justice, which carries a 2-month sentence. If both of them confess, they will both serve a 3-month jail sentence. This situation is: a. not realistic because those accused of insider trading always keep silent b. not realistic because those accused of insider trading are never encouraged to confess c. an application of the prisoner's dilemma d. an example of cartel behavior

c. an application of the prisoner's dilemma

(Ch. 17 Quiz) (Q15) Which of the following is most likely to reduce the supply of labor? a. an increase in population b. a decrease in labor productivity c. an increase in the value placed on leisure by workers d. a decrease in the value placed on leisure by workers

c. an increase in the value placed on leisure by workers

(Ch. 15 Quiz) (Q15) To prevent price wars and enhance profits, firms in a cartel may: a. encourage foreign competition b. establish a contestable market c. collude d. accept the price in the marketplace

c. collude

(Ch. 20 Quiz) (Q6) The prisoner's dilemma is a well-known game in which: a. cooperation between prisoners is always the best independent action b. players never cheat c. noncooperation between prisoners is not the best joint action but is the best independent action d. players always cheat

c. noncooperation between prisoners is not the best joint action but is the best independent action

(Ch. 17 Quiz) (Q10) If the law of diminishing marginal product holds true and workers emigrate from Haiti, the marginal product of the workers remaining in Haiti will: a. fall because more workers are working with the same amount of capital b. fall because fewer workers are working with the same amount of capital c. rise because fewer workers are working with the same amount of capital d. rise because more workers are working with the same amount of capital

c. rise because fewer workers are working with the same amount of capital

(Ch. 17 Quiz) (Q1) The labor market is a market in which: a.labor supply and labor demand alone determine wages and employment b. firms determine the supply of labor c. social and political pressures are particularly strong d. the Invisible Hand operates unimpeded by other forces

c. social and political pressures are particularly strong

(Ch. 20 Quiz) (Q7) Every value in a payoff matrix represents: a. the worst possible outcomes of various players in a game b. the gains and losses of decisions for each player regardless of the decisions of other players c. the gain or loss of a decision for each player given the decisions of other players d. the best possible outcomes of various players in a game

c. the gain or loss of a decision for each player given the decisions of other players

(Ch. 15 Quiz) (Q2) The North American Industry Classification System (NAICS) categorizes firms by: a. market structure, ranking them from perfectly competitive to monopoly b. profits, since profits tend to be higher in more concentrated industries c. type of economic activity, and groups firms with like production processes d. market share, and groups firms with like market power

c. type of economic activity, and groups firms with like production processes

(Ch. 20 Quiz) (Q8) The equilibrium solution for the following payoff matrix is (refer to figure in folder): a. -1, -1 b. 0, 2 c. 2, 0 d. 1, 1

d. 1, 1

(Ch. 15 Quiz) (Q6) A market has the following characteristics: There is strategic pricing, output is somewhat restricted, there is interdependent decision making, and some long-run economic profits are possible. This market is: a. perfectly competitive b. a monopoly c. monopolistically competitive d. an oligopoly

d. an oligopoly

(Ch. 17 Quiz) (Q19) A reduction in the demand for labor will cause wages to: a. increase and employment to decrease b. decrease and employment to increase c. increase and employment to increase d. decrease and employment to decrease

d. decrease and employment to decrease

(Ch. 17 Quiz) (Q5) The price of apples is currently $1 per pound. If apples are sold in a competitive market and the price of apples increases to $2 per pound, the marginal revenue product (MRP) of labor used to produce apples would: a. not change b. change in a manner that cannot be determined without additional information c. be cut in half d. double

d. double

(Ch. 17 Quiz) (Q9) Refer to the table shown (refer to figure in folder). If the price per unit of product is $2 and the wage rate is $25, a profit-maximizing firm operating in competitive markets would hire: a. six workers b. three workers c. five workers d. four workers

d. four workers

(Ch. 15 Quiz) (Q5) One advantage of the Herfindahl index over the concentration ratio is that it: a. takes into account only the leading firms in an industry b. tells about only the top 50 firms in an industry c. is easier to calculate d. gives extra weight to firms that are especially large

d. gives extra weight to firms that are especially large

(Ch. 17 Quiz) (Q12) The opportunity cost of leisure: a. has nothing to do with wages b. remains the same as wages get higher c. decreases as wages get higher d. increases as wages get higher

d. increases as wages get higher

(Ch. 20 Quiz) (Q3) Game theory is designed to study situations in which each agent's decisions are: a. constrained b. independent c. uninformed d. interdependent

d. interdependent

(Ch. 20 Quiz) (Q1) Game theory: a. is more restrictive than the standard supply/demand model b. replaces the standard supply/demand model c. replaces the monopoly model d. is more flexible than the standard supply/demand model

d. is more flexible than the standard supply/demand model

(Ch. 15 Quiz) (Q19) Refer to the graph shown (refer to figure in folder). If a firm operating as if it were faced with a kinked demand curve believes that if it raises price from P2 to P1, its rival will not go along: a. it probably will raise price, since lower output means lower costs and greater profit b. D2 is the relevant demand curve c. the demand curve used by the firm for decision making is highly inelastic d. it probably won't raise price, since doing so would cause sales to drop from Q3 to Q1

d. it probably won't raise price, since doing so would cause sales to drop from Q3 to Q1

(Ch. 15 Quiz) (Q18) Suppose an oligopolistic firm assumes that its rivals will ignore a price increase but match a price cut. In this case, the firm perceives its demand curve to be: a. kinked, being steeper above the going price than below b. linear, being less elastic at lower prices c. linear, being more elastic at higher prices d. kinked, being steeper below the going price than above

d. kinked, being steeper below the going price than above

(Ch. 17 Quiz) (Q6) The derived demand curve for labor shows the: a. minimum amount of labor, measured in dollar value, that a firm requires at various wages b. maximum amount of labor, measured in dollar value, that a firm will hire at various wages c. minimum amount of labor, measured in labor hours, that a firm requires at various wages d. maximum amount of labor, measured in labor hours, that a firm will hire at various wages

d. maximum amount of labor, measured in labor hours, that a firm will hire at various wages

(Ch. 17 Quiz) (Q11) Refer to the graph shown (refer to figure in folder) If labor supply shifts from S1 to S2, the firm will: a. raise employment from q1 to q0 to maximize profit where MRP = W b. reduce employment from q0 to q1 to maximize profit where MRP = W c. raise employment from q2 to q1 to maximize profit where MRP = W d. reduce employment from q1 to q2 to maximize profit where MRP = W

d. reduce employment from q1 to q2 to maximize profit where MRP = W

(Ch. 15 Quiz) (Q1) Taking explicit account of a rival's expected response to a decision you are making is called: a. competitive decision making b. economic decision making c. monopolistic decision making d. strategic decision making

d. strategic decision making

(Ch. 17 Quiz) (Q3) Institutional discrimination exists when: a. discrimination is based on correctly perceived statistical characteristics of a group. b. discrimination is based on individual characteristics not related to job performance c. discrimination is based on individual characteristics related to job performance d. the structure of a job makes it difficult for certain groups of individuals to succeed

d. the structure of a job makes it difficult for certain groups of individuals to succeed