Econ 2302

What does the term "land" refer to in economics?

physical land as well as natural resources that come from the land. Land is generally inelasic in supply.

Assume that chicken and beef are substitutes. Their cross elasticity of demand is therefore

positive

There are _____ determinants of supply.

six

How does a quota affect prices in the domestic market?

It increases the price of the product above the world market price.

As you move from left to right along a production possibilities frontier that is bowed out from the origin, the opportunity cost of producing the product on the horizontal axis:

increases.

__________ is based on different levels of consumption.

Second-degree price discrimination

Able Pads, Inc., sells plain white printer paper in a perfectly competitive market. What does its individual demand curve look like?

horizontal line

Which of these examples is a fixed cost?

liability insurance for a lawn care company

Which sector represents the largest percentage of total U.S. exports?

services

Suppose that a price-discriminating monopolist faces a downward-sloping demand curve with a vertical intercept of $8. Given the firm's cost conditions, a monopolist would choose a price of $4 and sell 4 units of output. How much consumer surplus would be lost if the firm could practice first-degree price discrimination?

$8

Which of these elasticities of demand for labor is an inelastic demand?

0.5

Which of the following is not an example of physical capital?

education

What happens to consumer surplus when a common good is overused?

It decreases.

When were average tariffs on dutiable imports the highest in the United States?

1932

The market price in a perfectly competitive market is $15, and 2,000 units are bought and sold. Assume the market becomes monopolized. What would you expect to happen?

The price would rise above $15, and the number of units sold would fall below 2,000 units.

Markets exhibit efficiency when every buyer and seller eager to buy or sell goods is able to do so. When this happens, _____ maximized.

gains from trade are

Marginal cost is the:

change in total cost when one more unit of output is produced.

Price changes have a bigger effect on revenue when demand is

inelastic

The market period is defined as a period so short that the _____ and the number of firms are fixed.

output

The United States exports more in _____ than it imports.

services

If farmers begin using better fertilizers to grow corn, we would expect a(n) __________ in the supply of corn.

increase

The graph below demonstrates the five-step process to determine maximum profit. What is Step 4?

Find the average total cost at the profit-maximizing output.

The graph below demonstrates the five-step process to determine maximum profit. What is Step 2?

Find the profit-maximizing output.

The graph below demonstrates the five-step process to determine maximum profit. What is Step 3?

Find the profit-maximizing price.

Unions exert their influence in the labor market in all of these ways except:

restricting wages.

Which of the following laws were not introduced to prevent discrimination in the workplace based on race or gender?

Norris-LaGuardia

Fat's Meats is part of the cartel that controls the kielbasa industry. Which of the following would cause instability in this cartel?

Fat's Meats starts differentiating its kielbasa.

A(n) _____ means a country can produce more of a good than another country using the same amount of resources.

absolute advantage

The difference between what a consumer is willing to pay and what he or she actually pays for a good or service is known as:

consumer surplus

Which of the following would cause a decrease in producer surplus?

a decrease in prices that sellers receive because of a sales tax

Brea is a business owner who is in charge of ensuring that her business earns enough money to pay the rent, pay the employees, and purchase new manufacturing machines when the old ones wear out. Which of these resources best describes Brea?

entrepreneurial ability

Given a choice between tariffs and quotas:

governments prefer tariffs because tariffs bring in revenue to the government.

The _____ is the horizontal sum of the individual labor supply curves in the market.

market supply for labor

Having a comparative advantage in producing a good means that:

one can produce more units of that good than any other country.

Asymmetric information occurs when:

one party in a transaction has significantly better information than another party.

When an economic model is used, it tends to:

start with very few details in order to simplify the model.

Advanced Printing Systems is a firm in a monopolistically competitive market. If it sells its product at $11 at the equilibrium quantity and earns normal profit, what is its long-run average total cost?

$11

When two hardware stores are deciding whether to advertise in this week's newspaper without knowing what the other store will do, they are engaged in a:

simultaneous-move game.

U.S. solar panel manufacturers accuse China of providing illegal subsidies to their solar panel manufacturers in the form of cash grants and low-interest government loans. They say the result is that Chinese solar panels have flooded the market at low prices that they can't compete with. Which argument is being used by Western solar panel manufacturers?

the antidumping argument

Estimates suggest that about 80% of the world's manufactured Christmas decorations are made in China. This is likely an example of:

comparative advantage.

In 2013, the market for fast-food chicken was dominated by Chick-fil-A (about 26%) with KFC in a close second (about 22%). Popeye's had about 11%, Zaxby's about 5.5%, and Church's and Bojangle's both at about 4.5%. How would you describe this industry?

two dominant firms and a number of smaller firms that sell a differentiated product

What factors put constraints on consumers' consumption choices?

a limited income and the prices of goods and services

Which of the following is an example of an ad valorem tariff?

Zimbabwe adds a tax of 5% to the value of diamonds imported from Botswana.

If the income elasticity of demand of a good is positive but less than 1, the good is

normal good

In the short run, output for an existing plant will vary by the amount of:

labor employed

What are copyrights?

legal protection of writings and artistic impression

Markets work most efficiently when:

there are more buyers and sellers

The Gini coefficient for the country of Amelia was 0.23 before a system of taxation and transfer payments to the poor was initiated. What could be the likely Gini coefficient after this program was put in place?

0.19

What does network compatibility ensure?

that media can be used on competing formats

Unitary elastic supply curves always cross:

through the origin.

Which of the following factors can contribute to an economy's growth?

Improvements in land, labor, and capital

If Jerry cannot tell the difference between Coke and Pepsi, what would Jerry's indifference curves for Coke and Pepsi look like?

They would be straight lines (linear)

Obtaining a flu shot creates _____ by reducing the probability of infecting others since you are less likely to become sick.

external benefits

Short-run losses in a perfectly competitive industry will cause _____ an industry in the long run.

firms to exit

A rightward shift of a supply curve would be the result of:

lower production costs.

If a decrease in income causes a decrease in the demand for a good, then the good is called a(n) _____ good.

normal

College students invest in their education in multiple ways. Which of these are NOT considered one of the costs of their education?

earnings by working part-time while attending college

Since there are many different brands of tablet computers to choose from, demand in the tablet market is

elastic

Currently, the market for pizza pies in your neighborhood is at equilibrium. If a large number of people move into the area, we would expect the market price of pizza to:

increase

The _____ is defined as a period when plant capacity and the number of firms in an industry can change.

long run

What illustrates the lowest unit cost at which any particular output can be produced in the long run?

long-run average total cost

During the Major League Baseball World Series, the quantity demanded for baseball tickets is greater than the quantity supplied of baseball tickets. This situation is referred to as:

shortage

The figure shows the market for portable DVD players. Assume the government sets a price ceiling at $20. This price ceiling will:

shortage

Each month, you have $15 to spend on toys and treats for your cat. Cat toys cost $3 each, and cat treats cost $1.50 each. Which of the following combinations of toys and treats would appear on your budget line?

3 cat toys and 4 cat treats

For every consumer there is a maximum amount he or she is willing to pay for a good. Consumer surplus is the difference between that amount and

the market price

Panamint Springs, California, is located on State Route 190 (SR190). The community's gas station is the last one for many miles in either direction on SR190. This means that this gas station:

has monopoly power.

Jon enjoys fishing (which costs $20) and golf (which costs $30) and has $140 to spend each month on these activities. Last month, Jon fished four times and golfed twice. The last fishing outing provided Jon a marginal utility of 50, and the last round of golf provided a marginal utility of 120. What is Jon's marginal utility per dollar spent on the last time fishing? What about the last round of golf?

𝑀𝑈𝑃 fishing = 2.5 and 𝑀𝑈𝑃 golfing= 4

A simultaneous-move game between Lowe's and Home Depot is illustrated in the table below, in which both companies are deciding whether to advertise in the newspaper without knowing the other's strategy. Both companies have to make a decision at the same time, and the payoffs are in millions of dollars. If both firms want to maximize their own profit, what should they do?

Both firms should advertise.

The table above shows the production possibilities for two countries. Brazil has an absolute advantage in producing _____________.

Cars and computers

Sally can type 100 words per minute while David can type 200 words per minute. Given these numbers, society would be better off if which one of the two was employed as a typist?

David

Suppose the mayor of your city is considering building a new toll road to reduce congestion. The cost of the toll road is $10 million. The road is estimated to generate a profit, from tolls collected less expenses collecting the tolls and maintaining the road, of $2 million per year.

If the discount rate is 8%, it would take 7 years before the road is paid for.

Garbage dumps are a particular source of methane, a potent greenhouse gas that bubbles up as the garbage decomposes. As a way of contributing to a reduction in global greenhouse emissions, it makes more sense for companies in the European Union to help Indian garbage dumps reduce their release of methane. Select all the options that explain why the statement is correct.

India's dumps lack the technology to reduce methane emissions. Reductions in methane emissions by Indian dumps are likely to be less costly than equivalent reductions by European dumps.

Suppose that the following bundles appear on the same indifference curve: 10 shirts and 5 shoes, and 8 shirts and 9 shoes. On a different indifference curve, the bundles of 12 shirts and 6 shoes, and 8 shirts and 7 shoes appear. Which properties of indifference curves, if any, are violated?

Indifference curves cannot cross.

How would stricter child labor laws affect the labor supply of a developing country where child labor is common?

It would cause the market labor supply curve to shift left.

The market price in a perfectly competitive market is $15, and 2,000 units are bought and sold. Assume the market becomes monopolized. What would you expect to happen to the market price?

It would rise above $15.

Which of the following statements explains why markets lead to an efficient outcome for buyers and sellers?

Markets are flexible, so that prices adjust until every unit of a good that sellers wish to sell is purchased by a consumer who wishes to buy it.

A firm can segment a market for a network good, targeting different subsets of customers with varying elasticities of demand. Which of the following is not a pricing strategy that might achieve this effect?

Markup pricing

Which of the following might be considered economic discrimination?

Mike is paid less than Joy. They have the same ability, experience, and education.

About 1 in 7 persons in the United States today lives below the poverty threshold for their household. Are people who live in poverty today just as poor as those who were in poverty in 1960?

No. Poor people today experience a higher standard of living than poor people in 1960.

The commercial airliner manufacturing industry is dominated by two firms that supply products to the entire world. There are few other firms because of the industry's expensive start-up costs. This industry is an example of which type of market structure?

Oligopoly

The U.S. Department of Labor reports that of the roughly 150 million people employed, just over half are paid hourly, but less than 5% earn the minimum wage or less; 95% of wage earners earn more. And of those earning the minimum wage or less, 25% are teenagers living at home. All of the following are reasons why minimum wage remains an important issue EXCEPT:

People do not care about the minimum wage because it only affects teenagers and individuals not willing to increase their skill set.

Societies tend to permit some degree of price discrimination in product markets. For example, businesses discriminate in the pricing of amusement park tickets based on age (children and senior citizens are often offered discounts) and automobile insurance based on gender (men are often charged higher premiums than women). However, we do not permit discrimination in wage rates. Why do socities allow price discrimination but reject economic discrimination?

Price discrimination can have both valid positive and normative justifications, but economic discrimination never has valid positive or normative justifications.

Which statement regarding capital investments is correct?

Recessions generally discourage capital investment.

Which of the following is NOT a requirement for successful price discrimination?

Sellers must provide a product for which there are no close substitutes.

Which of these is TRUE when trade occurs?

Some people may lose their jobs when production is moved to other country.

Strawberry breakfast bars sell at about seven times the usual rate when a hurricane is predicted to hit Florida. Which of the following best explains this?

The demand increases due to a change in expectations.

Which of the following is an argument for protecting an infant industry?

The industry is too undercapitalized to compete.

The rapid sales growth of electric plug‑in cars has led to a reduction in the demand for fossil fuels, a development that has been cheered by environmental groups. However, while fossil fuel consumption has dropped, the increase in carbon emissions caused by plug‑in battery production and the increased use of electricity (some of which is still produced from coal) has offset the emissions reductions. What factors might be considered in a cost‑benefit analysis of the use of electric plug‑in cars?

The lifetime of batteries Mileage achieved by plug‑in cars Drivers' driving behavior

When cigarette taxes are raised, what is a potential social benefit that may result?

The quantity of cigarettes purchased will fall, as some consumers will stop smoking.

The New York Times reported in an article titled "What the Top 1% of Earners Majored In," that 8.2% of Americans who majored in economics for their undergraduate degree are in the top 1% of salary earners. Only those who majored in pre-med had a higher percentage in the top 1%. Which of the following is a plausible reason why economics majors have done so well in the job market?

The subject of economics allows students to pursue careers in a wide variety of areas.

A $1,000 face value bond sells for $1,052. Which of the following must be TRUE?

The yield is less than the coupon rate.

If an economy moves from a point on a production possibility frontier line to a point to the right of that production possibility frontier, what event might have occurred?

There has been a discovery of new technology that expands production possibilities. If there was an advancement in technology to produce a certain good or product it would increase the production possibility which result in the production of more of that product.

Suppose that a new Harry Potter book is released, and fans line up for days to be the first to buy it. Are these fans core users or casual users in their demand for the new book?

They are core users with inelastic demand.

__________ is the most common type of price discrimination.

Third-degree price discrimination

Since the Civil War, Hawaii had been a major producer and exporter of sugarcane. About the time Hawaii became a U.S. state in 1959, the sugar industry had already started its decline. In 2015, the last sugar plantation in Hawaii closed. Select the plausible reasons why sugar is no longer produced in Hawaii, although it continues to be produced in Florida and Louisiana.

U.S. tariffs on sugar imports declined, increasing foreign competition facing Hawaiian sugar producers. Developments in air travel increased Hawaiian tourism, raising the opportunity cost of sugar production.

Shaniah learned from a Cornell University Web site for beginning farmers that if she wants to start farming, she should consider what is demanded by society. Which of these basic economic questions does this illustrate?

What good or service is to be produced?

Which of these is an example of an inelastic supply?

a product that has a price elasticity of supply that equals 0.5

How might an industry's costs change in the long run? a. Costs may decrease due to b. Costs may increase because

a. economies of scale. b. an expanding industry bids up resource or input costs.

What is the shape of the market labor supply curve?

an upward-sloping line

The commercial airliner manufacturing industry tends to have very little competition because it is prohibitively expensive to start a new company in this industry. This is an example of:

barriers to entry.

Why does the quantity of public college education determined in a free market (without government intervention) represent a market failure?

because the market-determined equilibrium quantity would be less than the quantity most people view as desirable.

In countries like the United States, the government taxes the wealthier residents and transfers some of that money to the poorer residents through programs such as welfare. This system of taxing and transfer payments causes the Lorenz curve to:

bend closer to the 45-degree line.

Why would the demand for business airline travel be less elastic than the demand for vacation airline travel by retirees?

business travelers usually must make their flight arrangements over short periods of time, whereas retirees have greater flexibility in determining when to fly.

A country that does not have an absolute advantage in the production of any good or service:

can benefit from trade by specializing in its comparative advantage.

For which of the following industries is supply most elastic in the long run?

coffee shops

If cream cheese and bagels are complements, then an increase in the price of cream cheese will __________ the demand for bagels.

decrease

When the market price falls below equilibrium, some producers are unwilling to sell at a lower price, causing producer surplus to:

decrease

Sandy owns the only landscaping company in town that specializes in flower gardens—thus, Sandy is a monopolist. At a quantity of 10 flower gardens, the marginal cost of producing one more flower garden is $300, and the marginal revenue from selling one more flower garden is $250. To maximize profits, Sandy should

decrease output to the point where 𝑀𝑅=𝑀𝐶 and increase price based on the demand curve.

Why, if competitive firms are earning economic profits in the short run, are they unable to earn them in the long run? If firms are making short-run profits,

firms will enter the industry and greater competition will drive profits to zero in the long run.

Evaluate the statement. "Economics is everything to do with money." The statement is

flase. Economics is the study of decision-making given scarcity

Suppose the following two events occur at the same time: the Chicago Cubs win the World Series, and the workers who make Cubs merchandise overseas go on strike. Holding everything else constant, we would expect the price of Cubs' merchandise next season to _____ and the quantity of merchandise sold to _______.

increase; increase or decrease

Suppose you have a very efficient study system. Then, as you increase the hours that you study for an economics exam, the opportunity cost of studying for the exam:

increases.

Businesses can acquire financial capital through all of the following ways except

liquidating their assets.

Adam is currently consuming a large quantity of orange juice and just a small amount of milk every day. Assuming an indifference curve with orange juice measured on the vertical axis and milk measured on the horizontal axis, we can conclude that Adam's marginal rate of substitution of orange juice for milk is:

low

Fat's Meats is in an oligopoly market. According to the kinked demand curve model, if it lowers its prices because costs decrease, its competitors will:

lower their prices so they don't lose market share.

The profit-maximizing rule states that firms maximize profit by producing output at a level at which _____ equal(s) marginal cost.

marginal revenue

Which of these products has (approximately) the smallest price elasticity of demand?

medical care

Some colleges and universities charge tuition by the credit hour. Other colleges and universities charge tuition by the term, allowing students to take as many classes as they desire. How do the different tuition structures affect the incentives students face when deciding how many classes to take? Each term, students will take

more courses if they pay a fixed tuition per semester.

The movie theater in your neighborhood charges lower ticket prices to senior citizens than to other patrons. Assuming that this pricing strategy increases the profits of the movie theater, we can conclude that senior citizens must have ________ for movie tickets than other patrons.

more elastic demand

Short-run supply curves are _____ market period supply curves.

more elastic than

Suppose the government in your City imposes a $0.50 excise tax on gasoline. If demand for gasoline is more inelastic than its supply, then the burden of this tax will be shared:

mostly by buyers of gasoline.

Which of the following best describes public radio?

nonrival and nonexclusive

In August 2010, Kodak and Apple sued each other over the use of preview image technology. The dispute involved the unauthorized use of:

patents.

Because the U.S. government wants to reduce the nation's reliance on fossil fuels, greater use of solar panels has been encouraged among households and businesses. However, the cost of installing solar panels can be prohibitively expensive for most people. Because people follow incentives, what can the government do to encourage more households and businesses to install solar panels?

pay subsidies to individuals and businesses who install solar panels.

Lorena considers coffee and tea to be substitutes. Therefore, the cross elasticity, also known as cross price elasticity, of demand between coffee and tea for Lorena must be:

positive

The goal of price discrimination is to increase _____ by charging more to those who have _____ demand.

producer surplus; less elastic

A(n) _____ is represented by the horizontal distance between the supply and demand curves when price is below the equilibrium.

shortage

Disneyland in California has an exclusive members‑only club called Club 33, where celebrities and wealthy executives dine on fine food. Although annual membership fees are reported to be about $30,000, there is still a 14-year waiting list to join. b.

shortage of 80 memberships

Why would we see a decrease in demand for certain goods if incomes are rising in an economy?

some goods are inferior goods and consumers substitute normal goods for them when incomes are rising.

Why does deadweight loss occur at a price below equilibrium even though some consumers benefit? The deadweight loss occurs because

some trades between willing sellers and buyers are missed because price is too low.

Yuki purchases nonrefundable ski lift tickets for her kids. Her kids want to go to the museum instead. She says they can't go to the museum because she has already spent $140 on ski lift tickets. This is an example of:

sunk cost fallacy.

Which of the following is NOT a command and control environmental policy?

taxing sulfur emissions

According to the Bureau of Labor Statistics Occupational Outlook Handbook, which of the following industries is expected to generate the most new jobs over the next 10 years?

technical services

In the last few years, Google has expanded beyond a search engine service to include products, such the Pixel phone, and services, such as unlimited photo storage with Google Photos. Suppose that Google is considering charging a fee for the use of Google Photos. Google executives must decide whether to charge a monthly fee of $4.99 or a monthly fee of $5.00. According to behavioral economic theory, which of the following explains how consumers would likely interpret the fee amounts?

the $4.99 fee as more affordable than the $5.00 fee due to framing bias.

Marginal factor cost is:

the added cost associated with hiring one more unit of labor.

Poverty rates have declined for blacks and have been relatively stable for other races over the last 40 years. However, the overall U.S. poverty rate is still above 12%. Each of the following helps explain why reducing poverty below 10% to 15% proves difficult except

the growth of government spending

Which argument against free trade would be used in order to protect an underdeveloped or undercapitalized industry from foreign competition?

the infant industry argument

Financial capital is:

the money required for businesses to purchase inputs for production and to run their operations.

Cody's neighbor decides to raise goats and sell their milk to mothers whose babies are allergic to cow's milk. Cody soon finds out that goat farms have a pretty bad odor. In this case, the externality originates from:

the producer.

Suppose the equilibrium price for bicycle tires is $42 but the market price rises to $67. What has happened to total surplus in this market?

total surplus decreases

Franklin buys bananas and oranges each week. The price of bananas increases from $1.29 per pound to $2.17 per pound. What happens to Franklin's budget line?

It pivots inward.

What happens to consumer surplus in the tire market when a new technology lowers the cost of tire production?

consumer surplus increases

Suppose the price of a good is $179. The first customer is willing to pay $200, the second customer is willing to pay $210, and the third customer is willing to pay $300. How much consumer surplus is there in this market?

$173

Metropolitan Power and Light is a monopoly in the electrical generation and distribution industry. If its marginal revenue equals $2 when its output is 100,000 kilowatt hours, what is its marginal cost if it is maximizing profits?

$2

Sam's willingness to pay for a pizza is $15. If the price of pizza is $10, Sam's consumer surplus after buying the pizza is:

$5

Innovation and technology have allowed for new forms of biodegradable plastics to be created that are less harmful to the environment. This appeals to consumers, but the new biodegradable plastics are costly and their use is limited.

A) No, because firms can produce efficiently using either traditional or biodegradable plastics B) yes, because consumers' preferences between traditional plastics and biodegradable

The elasticity of demand and total revenue

A. it falls B. it falls

In 2017, economist Richard Thaler won the Nobel Prize in economics for his contribution to behavioral economics, focusing on the role of nudges in business practices. For example, a newspaper app may restrict access to its articles without a subscription, but offer a free one‑month trial. However, this free trial subscription turns into an automatic renewal at the full price unless consumers actively place a phone call to cancel their subscription. How might nudging affect consumers' utility in the case of the newspaper app?

If consumers forget their future commitment to end the free trial, the resulting cost may exceed the utility gained from consuming the product.

Which of the following is TRUE of an oligopoly?

The firms are interdependent.

When comparing the income of different households, would income levels be more similar over their entire life cycles than during one specific year?

Yes, because family and individual incomes vary significantly over people's lives.

Assume that the population of Lauronia decreased and so did its total production, since fewer people can produce fewer things. What would this look like on a graph of the production possibilities frontier?

a new curve that is to the left of the original curve

If the quantity demanded of sunglasses decreases by 2% when average incomes fall by 10%, then we know that sunglasses are

a normal good.

Offering 0% interest for the first six months on your furniture purchase is an example of which strategy?

a teaser strategy

Each of the following is a primary cause of poverty except

a willingness to relocate.

Consumer surplus is represented by the area:

above the market price and below the demand curve.

In the fictitious country of Amelia, the wage earners in each quintile earn 20% of total income. What would be the shape of the Lorenz curve for Amelia?

an upward-sloping straight line

Suppose the equilibrium price in a market is $10. The government sets a maximum price of $7. This price of $7 is an example of a(n):

binding price ceiling.

Suppose the government in your city imposes a $0.50 excise tax on gasoline. The burden of this tax falls on:

both buyers and sellers

When one country has an absolute advantage over another, _____ can benefit from trade.

both countries

Migrant workers obtain temporary work permits to do jobs that most American workers avoid, such as picking fruit at the minimum wage, allowing U.S. farms to compete against low‑cost imports. However, critics claim that if farm wages increase, these jobs can be filled by American workers. Given these viewpoints, is there a connection between restricting migrant workers and restricting international trade? Restrictions on

both migrant workers and international trade lead to a rise in the price of goods.

The utilitarian theory of consumer behavior assumes that utility:

can be measured.

Low‑fare carriers such as Spirit, Allegiant, and Frontier have been successful at gaining market share by offering low base fares, but then charging for everything from seat assignments to snacks, to carry‑on bags. In response, the major airlines (Delta, United, and American) introduced a new fare category called Basic Economy that mimics the low‑fare competition. This new strategy allows the major airlines to avoid a prisoner's dilemma outcome by

continuing to charge higher prices to their more loyal flyers, while competing for low‑fare carriers' customers.

All else equal, when the market price rises above equilibrium, consumer surplus:

decreases.

If Switzerland can produce more watches in a year than Austria, we know that Switzerland:

definitely has a comparative advantage in producing watches.

When demand for labor is MORE elastic, the:

easier it is to substitute other factors for labor.

Walmart undersells its competitors. In part, this is because of:

economies of scale.

If the price elasticity of demand for corn dogs is 1.8, then the price elasticity for corn dogs is considered:

elastic.

The _____ measures how responsive the quantity of labor demanded is to changes in wages.

elasticity of demand for labor

Which of the following is a physical network?

fiber optic cables

Which of the following statements about the impact of time on the price elasticity of supply is true?

in the long run, supply is elastic

What are poverty thresholds?

income levels for various household sizes, below which people are considered to be living in poverty

Recently, several U.S. states have considered or passed legislation to decriminalize recreational marijuana use. Proponents say that drug transaction and enforcement costs will fall. Make the appropriate adjustments to the graph below if marijuana is legalized. Assume marijuana will be sold in state-regulated shops. Assume also that law-abiding consumers may enter the market once states legalize recreational marijuana.

increase, increase, increase

You sell t-shirts in the street corner in order to support some of your tuition costs. Around the middle of the semester, your friend Carlos gives you the following advice: "if you increase the price of each t-shirt you sell you will be able to make a lot more money selling your t-shirts". For Carlos to be right, the price elasticity of t-shirts must be price:

inelastic

Japan's lower birth rates and low levels of immigration have caused the country to age rapidly over several generations. This would _____ the level of investment in human capital and _____ the rate of return and cost of funds in the market for investment in human capital.

lower; lower

After Lindsay receives a 30% raise at work, she buys 15% less canned cream corn. For Lindsay, which type of good is canned creamed corn?

inferior good

In competitive labor markets, firms can make wise decisions on how many workers to hire because:

information in the industry is widely available and accurate.

When a company uses resources to train its staff or subsidize tuition for student employees, it is treated as current spending, rather than investment. Current spending is typically the cost of selling or producing goods. It might make more sense to categorize such spending as

investment in human capital.

In general, the smaller the percent of household income spent on a product, the:

lower the elasticity of demand.

PIP Printing Systems is a firm in a monopolistically competitive market. It maximizes profits in the short run by producing the level of output at which:

marginal revenue equals marginal cost.

Individual firms are price takers, which means that in a perfectly competitive market they get their prices from the _____ because they are so small they cannot influence market price.

market

Consumer surplus is the difference between willingness-to-pay and:

market price.

Game theory is an approach that uses:

mathematics and simulation.

What explains why a change in the price of one good causes the budget line to pivot, while a change in actual income causes a parallel shift?

maximum, maximum

Because a dollar increase in the price of a house is different from a dollar increase in the price of gasoline, economists use the _____ in order to compare the _____ of different products.

percentage change; sensitivity of the demand curves

Tom is a junk remover who occasionally finds rare antiques to sell. He uses an online auction site to sell each antique at the highest possible price customers are willing to pay. Tom is engaging in _____, which leads to _____ consumer surplus.

perfect price discrimination, zero

Which of the following would be considered when calculating wealth?

the amount of money that a person has in the bank

What must be true of the income and substitution effects for labor supply curves to become "backward bending"? For the labor supply curve to become "backward bending"

the income effect must dominate the substitution effect

Danica earns $45,000 a year working for a big corporation. She also owns corporate stock that is currently valued at $105,000. She has a $150,000 mortgage on a house that's valued at $200,000. Which of the following would represent Danica's wealth?

$155,000

Suppose your favorite band is on tour and coming to your area. Tickets are $100, and you take a day off from work for which you could have earned $60.

$160

Advanced Printing Systems is a firm in a monopolistically competitive market. If its marginal cost is $18 per unit in the short run, if it is maximizing profits, and if it is selling at the equilibrium quantity, what is its marginal revenue?

$18

Mutual interdependence in oligopoly markets implies which of the following? Mutual interdependence means

-actions by firms impact other firms' abilities to sell or price their products successfully. -firms consider possible reactions of other firms in making marketing decisions.

The supply curve is upward-sloping because higher prices ________.

-are needed to cover higher marginal costs

If Carolyn owns $10,000 worth of stock in Omega Construction and Omega loses a lawsuit for $50 million, what is the greatest amount that Carolyn can lose in that suit?

10,000

Ken's Chips just hired Simone, Mike, and Dauber to work on the assembly line. Now that the company has three extra employees, it can produce 45 more bags of chips per day. It can sell each bag of chips at the prevailing market price of $2. What is the marginal physical product of labor (MPPL)?

15

Which of these represents a correct pairing?

Allocative efficiency is associated with the basic economic question of what to produce.

Why does the total revenue of a product with inelastic demand increase even when the firm raises its price?

The price hike drives off only a few customers, and the remaining customers are paying a much higher price.

In which of the basic questions facing any society does technology play the greatest role? Technology plays the greatest role in the

how to produce question.

When wage differentials exist for workers performing the same tasks, we say that labor markets are:

imperfect.

Select the factors that contribute to income inequality across households.

Cases of luck Differing levels of investment in human capital Instances of discrimination Differing physical and cognitive abilities

Suppose that high temperatures and a lack of rain in the Pacific Northwest cause a shortage of cranberries, leading to a rise in cranberry prices. How would this affect the equilibrium price and quantity for other products that use cranberries, such as cranberry sauce and cranberry juice?

The equilibrium price will (rise) and the equilibrium quantity will (fall)

Which of the following will occur when a new tax is placed on satellite radio services?

The price consumers pay will rise by less than the amount of the tax.

The concept of a budget line is similar to the _____, which is limited by resources and technology.

production possibilities frontier

The Miami Heat can sell five courtside seats for $2,000 each or six courtside seats if it reduces the price to $1,600 each. What is the marginal revenue of the sixth seat?

-$400

Suppose that Michael's Bowling Alley offers 50% off bowling on Mondays, and as a result, drink sales increase by 40%. What is the cross elasticity of demand between bowling and drinks?

-0.80

A growing trend among apartment developers in large cities is to construct buildings with fewer, or no, parking spaces and smaller kitchens. The goal is to attract millennials who may choose to forgo a car and cooking at home. In exchange, developers are adding other amenities, such as restaurants and movie theaters, in locations where parking garages might otherwise be located.

-The average cost of an apartment may fall because the fixed cost will be lower for an apartment building that does not have a parking garage. -The average cost of an apartment may fall because these apartment buildings accommodate more apartments. -Smaller kitchens may result in lower construction costs (fixed costs), lowering the average cost of an apartment.

Which families with the following income to poverty ratios would be considered "severely poor"?

0.4

Ralph owns a candy store and made the decision to increase the price of caramels from $1 to $2. After tracking caramel sales for a while, he noticed that the quantity demanded had dropped from 1,000 to 500. What is the price elasticity of demand for caramels?

0.5

Metropolitan Power and Light is a monopoly in the electrical generation and distribution industry. If it charges $1 per kilowatt hour, its marginal revenue could be:

0.75

Which of the following factors will decrease the demand for labor?

A decrease in the cost of capital

Which of the following is a limitation of the infant industry argument?

Capital-intensive manufacturing tends to be encouraged over labor-intensive industries, and most developing countries are labor-abundant.

Carpetopia and Steam Cleaner Pros are two competing businesses that both install and clean carpets and rugs. Carpetopia has decided it wants to increase the size of its business and achieve more market power. How can this be achieved?

Carpetopia and Steam Cleaner Pros can merge.

_____ is a loss in net benefit that results from the inefficiency of a market not in equilibrium.

Deadweight loss

Which of these is a factor that can limit the benefits of trade?

Diminishing returns to specialization occur when resource costs rise due to scarcity. or There are communication costs involved in each trade.

The supply of skateboards increases, and demand stays the same. What would happen to the equilibrium price in this situation?

Equilibrium price would decrease.

Over the past 50 years, a shift from manufacturing jobs to service sector jobs has taken place in the United States. Which of the following best explains why this shift has occurred?

Globalization led to manufacturing jobs leaving the United States for more labor-abundant countries.

Many companies offer employees health savings accounts (HSAs) instead of traditional health care plans. HSAs provide each employee with money (usually between $500 and $1,000 per year) that can be used for any health care expense but then require employees to cover a much higher portion of expenses beyond that.

Health saving accounts will cause greater harm to low‑income employees because they will bear a greater burden covering health care expenses.

A simultaneous-move game between Lowe's and Home Depot is illustrated in the table below, in which both companies are deciding whether to advertise in the newspaper without knowing the other's strategy. Both companies have to make a decision at the same time, and the payoffs are in millions of dollars. If both firms want to maximize their own profit, what will be their payoffs?

Home Depot will earn $6 million, and Lowe's will earn $8 million.

Many of the decorative items made in China are hand-painted. China has a large labor supply, and workers earn relatively low wages. Which of these basic economic questions does this illustrate?

How are these goods to be produced?

Which of the following companies most closely resembles a monopoly?

Microsoft

Miranda and Jason are in the tutoring business. Miranda is willing to tutor as long as she gets $20, while Jason will not tutor unless he gets $35. If the most that someone would pay for tutoring is $30, how much producer surplus is earned?

Miranda= $10Jason= $0

Roger McMillan is an Olympic runner who is sponsored by Nike. If Roger wins the gold medal, then demand for Nike shoes will increase. If Roger wins the gold medal and Nike does not increase its supply of shoes, then what will happen to the price of Nike shoes according to the model of supply and demand?

Prices will increase.

Many new restaurants have opened in Collegetown in recent years. Given this change in supply, which type of demand curve would result in the largest change in the price of restaurant meals?

Relatively inelastic demand

Snapchat and Instagram are battling one another for dominance in social media. Why is it unlikely that one of the companies will become a pure monopoly?

Technology is always rapidly changing, so monopolies are limited to short-run economic profits.

Suppose you wish to purchase a corporate bond that offers a coupon rate of 10% in the bond market. You then notice the price of the bond is listed as greater than "100." Complete the following sentence, given that the price of the bond exceeds 100.

The yield will be less than 10%, possibly reflecting an improved bond rating.

__________ involves charging different consumer groups a different price.

Third-degree price discrimination

Assume that the price elasticity of demand for T-shirts is unitary elastic. If a surf shop increases the price of its T-shirts, what will happen to its total revenue from T-shirt sales?

Total revenue will stay the same.

Does a decision to go to college have anything to do with expanding choices or reducing scarcity?

Yes. College improves one's productivity as a potential employee and thus reduces the constraints that limit choice.

When can an economy increase the production of one good without reducing the output of another?

a point below the PPF.

Michael is hired at a firm where joining the union is optional, but he must pay dues to the union whether or not he joins. This firm is a(n):

agency shop.

Dan owns a small grocery store. When an item doesn't sell well, he'll typically stop carrying it in favor of something that sells better. What type of efficiency does this help him achieve?

allocative efficiency

A network effect is:

an external benefit generated from the consumption of a network product that is taken into account by individuals and firms in their decision making.

When is the slope of the network demand curve positive?

at lower quantities

In the United States, regulated monopolists are typically subject to a rule that says price must be equal to _____ cost.

average total

The short-run supply curve is the marginal cost curve above the minimum point on the _____ curve.

average variable cost

When price is below the minimum point of the average total cost curve but above the minimum point of the _____ curve, the firm continues to operate but suffers an economic loss.

average variable cost

Which of these leads consumers to buy more of a good as the price of that good decreases?

both the substitution effect and the income effect

Colorado was the first state to legalize recreational marijuana in 2012. Since then, about a dozen have followed suit, leading to a boom in the number of growers and shops selling marijuana. A problem, however, is that federal law still prohibits the sale of marijuana, though in practice, state laws have been respected. Still, many shop owners choose to conduct transactions only in cash to avoid leaving a trail of evidence from credit card transactions, which reduces the risk of prosecution but raises the risk of theft or loss. With so much retail competition and the added risk, why would so many choose to venture into this business?

can earn profits from sales, given the high demand for marijuana.

An example of companies adjusting their product to cater to local tastes and customs is:

changing the language of a textbook.

The government might use market forces to encourage recycling by doing all of the following except

charging an excise tax

Lower levels of satisfaction are found on indifference curves that are:

closer to the origin.

When a sports team consistently struggles to win any games, one strategy is to replace the coach. But when this happens, the new coach initially has the same players, the team's primary input. How can a new coach improve the team's record when the players are mostly the same? The new coach

comes with a new idea that allows him or her to use the inputs more efficiently and productively.

For which category of goods does the United States import more than it exports?

consumer goods

College students often buy cheap pizza because it is more affordable. Suppose after graduating, college students find high-paying jobs. The demand for cheap pizza will likely:

decrease because demand for cheap pizza is negative related to income.

Assuming everything else stays the same, an increase in the price of laptop computers will __________ of laptop computers.

decrease the quantity demanded

If the government imposes a price floor of $20 for this product, consumer surplus will___ and producer surplus will____ .

decrease, increase

How do monopolistically competitive firms attain market power? Such firms attain market power by

differentiating their products.

Which of the following makes a cartel UNSTABLE?

dissimilar products and cost structures

Suppose that a newly discovered oil reservoir spans the subsurface property of many landowners. However, if too many wells are drilled and used to pump out the oil too quickly, the oil field's water and gas pressure would drop, reducing the total recoverable oil from the reservoir. This situation may lead to a "tragedy of the commons" because

each landowner has an incentive to pump out too much oil too quickly, leading the reservoir to dry up prematurely.

What explains why unregulated monopolists, unlike perfectly competitive firms, can maintain positive economic profits in the long run? Unregulated monopolists, unlike perfectly competitive firms,

face no competition in the long run.

Many Super Bowl football tickets are resold online for several times their face value. As game day approaches, unsold tickets will likely

fall in price to avoid letting the ticket go unsold.

Fiber optics has revolutionized communication and helped usher in the information age. Because of the advantages of fiber optics over electrical transmissions via copper cabling, communications costs have plummeted. This has resulted in:

fewer constraints on trade.

The advent of containerization resulted in significantly lower shipping costs. It is estimated that 90% of cargo moves around the world in these big "boxes." This has resulted in:

fewer constraints on trade.

Suppose the government sets the maximum price for a normal doctor's visit at $20, but the current market price is $40. As a result of this government action, doctors will see:

fewer patients.

If specialization and trade create a win-win situation in which two countries gain, why is there often opposition to trade agreements and globalization? Opposition arises because

groups that produce products in which other counties have comparative advantages suffer.

Ken's Barber Shop has a tremendous amount of power over the market equilibrium price for haircuts in its geographic area. This means that Ken's Barber Shop:

has market power.

Which of the following choices does not provide a valid reason for why sunk costs should be excluded from present and future decisions?

have a non-monetary value

The figure shows the market for portable DVD players. Assume the government sets a price floor at $25. This price floor will:

have no effect

At the wholesale club, one can buy toothpaste at a lower unit price if one buys six tubes of toothpaste at once. This is an example of ____, which ____ producer surplus.

imperfect price discrimination; increases

Those on the political right would argue that:

implementing policies that increase economic growth is the best way to reduce poverty. or social justice does not require a government safety net. or the poor benefit from growth just as much as anyone else.

_____ costs refer to all of the opportunity costs of using resources that belong to the firm.

implicit

Grapes are used as an input in the production of wine, and wine and red meat are complements. A decrease in the price of grapes will _________ the total surplus in the market for red meat.

increase

If grapefruits have a price elasticity of 4, that means that for every 1% decrease in price, the quantity demanded will:

increase by 4%.

What is investment in human capital?

investment in any education that improves the productivity of labor

Economists refer to the payment to ________ as wages.

labor

In 2017, a $500 million private‑public initiative was announced for the purpose of boosting STEM (science, technology, engineering, and math) education, as the United States continues to fall behind other industrialized nations in student achievement in these fields. How would spending on STEM initiatives today, which leads to higher costs in the near term, pay off in future benefits to the economy? Investing in education will

lead to long‑term productivity gains.

Last week, Brian went to the club twice and to the cinema once. Since receiving his paycheck, he has gone to the club three times and to the cinema once. It can be inferred that Brian has

moved to a new indifference curve farther from the origin.

Suppose you are trying to understand the effect that an increase in the price of grapes will have on the market for wine. An effective model to determine this effect is one that evaluates the change in the price of grapes on the market quantity of wine assuming:

no other change takes place.

Suppose the equilibrium price in a market is $10. The government sets a minimum price of $8. This price of $8 is an example of a(n):

nonbinding price floor.

A commonly cited statistic from the U.S. Bureau of Labor Statistics is that women earn between 77% and 83% of what men earn for full-time work, which subsequently leads some to conclude that gender discrimination is the cause of this wage gap. However, most economists acknowledge that not all of this wage gap can be attributed to gender discrimination.

occupational choices, flexable scheduling, later

For more than two decades, the global commercial airliner manufacturing industry was dominated by Boeing (an American company) and Airbus (a European company). More recently, Embraer (from Brazil) and Bombardier (from Canada) have been gaining market share. With these new entrants, the commercial airliner manufacturing industry is an example of which type of market structure?

oligopoly

Why does an effective price ceiling appear below the equilibrium rather than above it? A price ceiling

only effective when it is low enough to restrict increases in the market price.

Comparative advantage occurs when one country has a lower __________ of producing a good than another country.

opportunity cost

A firm should never hire a worker when negative marginal returns set in. This is because

output will decrease.

The price elasticity of supply provides information about the responsiveness of quantity sold to changes in the:

price.

To which of the following does interconnection lead in the long run?

reduced costs

Which of the following is NOT a command and control environmental policy?

refunding five cents for returning glass bottles

Why does the 3D printer industry exhibit large economies of scale? The 3D printer industry operates with

relatively large fixed costs and small marginal costs.

Adam Smith used the idea of an invisible hand to explain how:

resources are allocated efficiently through individual decisions made in markets.

Which of the following describes a market with a monopsony?

several lawyers who are being recruited to work at the only law firm in the state

Have you ever had a Famous Amos cookie? Wally Amos already had a reputation for baking great cookies when he opened a cookie store in Los Angeles. By its second year of operation, the store was doing over $1 million in sales. Amos, the only owner, is running a:

sole proprietorship.

If the effects of pollution from a paper mill were taken into account by the mill, this would cause the _____ curve for the paper mill would be shifted to the _____.

supply; left

According to Adam Smith, the father of modern economics, markets promote efficiency through:

the incentives faced by individuals and firms.

The price of gas doubles. At first, many people still purchase the same amount of gas. Eventually, people start making other choices, like carpooling and telecommuting, which in turn leads to a decrease in their consumption of gasoline. This is an example of which of the determinants of elasticity?

time period

Fewer sellers of a product would cause the supply curve for that product to shift:

to the left.

A point found _____ of the production possibilities curve would represent a combination of goods that are unattainable.

to the right

A pricing strategy in which a good is differentiated by packaging it into multiple products for people with different demands is:

versioning.

The market demand for public goods is found by:

vertically adding the individual demand curves.

Which of these would be considered to be the cut-off point between a consumer buying a car and doing without the car?

willingness-to-pay

Employees who agree not to join a union as a condition of employment might sign a _____ contract.

yellow dog

If the equilibrium price of solar panels is $200 per panel, but a price ceiling of $150 per panel is imposed, what happens to the market for solar panels?

b) quantity demanded exceeds quantity supplied and a shortage occurs

Suppose you search for a used bicycle online, and are willing to pay at most $100. However, you successfully find one for sale priced at $80. What is the value of your consumer surplus?

$20

If the quantity demanded of personal computers increases by 5% every time the price of personal computers decreases by 10%, the price elasticity of personal computers is (remember to report the absolute value):

0.5

The following figure displays the average and marginal product curves of a company. Which of these statements is NOT true about these two curves?

Average product would increase only when marginal product increases.

According to the U.S. Department of the Treasury, people in the top income quintile pay roughly 70% of all federal income taxes. The remaining quintiles pay about 30%. Further, the bottom half of the population pays less than 10% of all taxes. Many politicians often assert that they want to bring tax relief—presumably with the idea of redistributing income—to "middle- and lower-income" families. Given the distribution of income tax payments, what might realistically enable middle- and lower-income tax relief?

expansion of earned income tax credit

A shortage in the market for economics textbooks will ___________ the price of textbooks.

increase

Unlike in the short run, in the long run a firm can:

leave the industry.

A graph in the "By the Numbers" section revals that most of the developed countries (Canada, Australia, the U.S., Switzerland, and Hong Kong) have relatively low tariffs on imports, while much of the developing world still has high tariffs on imports. In justifying their high tariffs, developing nations might cite the need to

protect their infant industries.

Which of the following is a characteristic of a monopoly market?

a one-seller market

Which of the following describes the difference between economies of scale and economies of scope? The difference is that

economies of scale are characterized by a decreasing long‑run average total cost curve due to specialization of labor. Economies of scope deal with firm's ability to produce related products due to similar production processes.

Why is the demand for gasoline relatively inelastic, while the demand for Exxon's gasoline is relatively elastic?

gasoline has few close substitutes, whereas Exxon gasoline has many.

Since 2006, Megabus has offered inexpensive bus service, sometimes for only $1. Megabus made an initial large investment in its bus fleet. This large investment is considered a _____ cost.

high fixed

Behavioral economics is the study of how:

human psychology enters into economic behavior as a way to explain why individuals sometimes act in predictable ways counter to economic models.

If a country is subsidizing the production of goods in order to sell them below cost overseas, which of the following arguments would be used to try to prevent this?

the antidumping argument

Luigi's is the only pizzeria in a small town in northern Alaska. It is constantly busy, but there is never a waiting time for a table. One of Luigi's friends suggests that he would earn much more money if he raised his menu prices by 25%, because no one is likely to open a new pizzeria in the near future. If Luigi follows his friend's advice, what would happen to consumer surplus, producer surplus, and efficiency in this market?

a. consumer surplus increase. b. producer surplus increases. c. falls due to fewer pizzas being bought and sold.

Total revenue is equal to:

the number of units sold times the price of each unit.

Which of the following is an example of a common property resource?

the ocean

When a letter is mailed from the U.S. to a foreign country, which of the following is not an essential facility involved in the process?

A Greyhound bus in the U.S.

According to the law of supply, if the price of cars increases, what will happen to the quantity of cars supplied?

The quantity supplied will increase.

If the price of chocolate increased, the result would be:

a movement along the same demand curve from one point to a higher point on the curve.

The supply curve is:

upward-sloping.

_____ advantage means that one country can produce more of a good than another country can.

Absolute

As a result, the number of high school graduates immediately enrolling in college will because the opportunity cost of going to college has .

Fall, risen

Which of the following factors would most likely cause a shift in the demand curve for candles?

Falling incomes due to a weakening economy.

Suppose the increased demand for corn for ethanol production has resulted in record high corn prices. Which of the following is likely to happen to the supply of wheat assuming that corn and wheat are substitutes in production?

The supply curve will shift left.

If the price of foam blanks used in surfboard production falls, what will happen in the market for surfboards?

The supply of surfboards will rise, putting downward pressure on price.

When Fitbit introduced its first wearable tracker in 2013, its popularity soared and Fitbit became the market leader for wearable technology. Not only did Fitbit allow one to track steps and heart rate, but it also allowed users to compete against other Fitbit users in a variety of challenges. The Fitbit's ability to allow users to interact created a network effect that led to a virtuous cycle. The same network effect eventually led to a vicious cycle when competitors entered the market.

The virtuous cycle arose because: every new buyer of a Fitbit increased everyone else's value of owning one. The vicious cycle arose because: as the number of people choosing a competitor grew, it became less exciting to own a Fitbit.

All other things remaining equal, the more elastic demand is, the higher the incidence of taxation on:

producers.

How many combinations of goods would be possible to illustrate on a production possibilities frontier?

two

Several medical studies have shown that drinking red wine in moderation is good for the heart.

Now consider the impact such studies might have on the types of grapes planted in new vineyards. Given this effect, the above graph might be further modified by a (rightward shirt of supply curve) for grapes used to produce red wines. Note: do not alter the graph to reflect this additional change. The overall effect of studies suggesting the health benefits of red wine on the equilibrium quantity of red wine is (positive) , and the effect of such studies on the equilibrium price is (indeterminate).

Joe and Susan's kids like to play outside. But they don't always put their toys away and tend to leave basketballs, Frisbees, and other items in Pat's yard. Pat finds this highly annoying. What is the origin of this externality, and who is affected by it?

The externality of littering the neighborhood with toys originates from consumers, Joe and Susan's kids, and the impact is taken by a consumer, Pat.

If the price of copper rises, which of the following may occur?

The profits of copper producers increase.

The growth of ride-sharing services such as Uber and Lyft has generated much discussion in the news. Drivers operate as independent businesses, working as many hours as they choose and earning a portion of the fares. Fares are set by the company, with market prices increasing during periods of high demand, such as "surge" pricing by Uber. From the driver's perspective, ride-sharing companies share many characteristics with perfectly competitive firms. Which of the following is not a characteristic found in ride-sharing companies?

The short-run supply curve is nonexistent.

A demand curve for a good or service that generates a network effect is called:

a network demand curve.

Advances in technology can make it less costly to produce a good or service. How would this be illustrated on a supply and demand graph?

a new supply curve to the right of the original curve

Kip invents a device that extracts water from a tuna fish can after it is opened. Kip most likely has a monopoly on this invention because he has:

a patent.

A medical imaging facility recently purchased a new open MRI machine to cater to patients who find the older closed machines claustrophobic. This new machine is an example of:

capital.

An increasing number of charities have turned to online auctions as a way to raise money by selling unique experiences donated by celebrities, such as a meet-and-greet with a celebrity before a concert or a walk-on role on a television show. Why would the use of auctions lead to a better outcome for the charity as opposed to just setting a fixed price? The outcome is better because

in an auction consumers reveal the highest price they are willing to pay, which may be higher than the fixed price

Suppose two countries are having a border dispute and each has troops amassed in the area that is disputed. If the much larger neighbor is willing to endure a small number of provocations before retaliating, it is said to be using a _____ strategy.

trembling hand trigger

Which of the following goods would likely be very inelastic?

Medication for a sick pet.

Which of the following is NOT a network?

an oligopoly network

Which of the following is an example of a price ceiling?

limits on tuition hikes at public universities

The ratio of income to poverty is the:

ratio of household income to the poverty threshold.

Charming Accessories, Inc., sells a total of 32 headbands. If the headbands are sold at a price of $2 each, what is the total revenue?

$64

The figure shows the market for hockey pucks. How much consumer surplus does Gabby receive?

$1

Advanced Printing Systems is a firm in a monopolistically competitive market. If it is selling its product at $12 at the equilibrium quantity and earning normal profit, what is its long-run average total cost?

$12

Suppose Kelly buys a washing machine for $450 that she was willing to pay $600 for. What is her consumer surplus?

$150

Suppose the price of a good in a market with three customers is $200. The first customer is willing to pay $200. The second customer is willing to pay $205. The total consumer surplus in the market is $15. How much is the third customer willing to pay?

$210

What was the poverty threshold for a family of four people in 2019?

$25,750

If Avery is willing to pay $10 for a pizza, Pia is willing to pay $13, and Sylvio is willing to pay $15, how much consumer surplus is achieved when the price of pizza is $12?

$4

Suppose the hot dog market is made up of three potential buyers: Ana, who is willing to pay $10 for a hot dog, William, who is willing to pay $8, and Mara, who is willing to pay $6. If hot dogs sell for $7, then consumer surplus in this market would be:

$4

Suppose you expect to receive a $10,000 bonus from your employer in two years upon completing your college degree. If the interest rate is 5%, what is the present value of the $10,000? The present value is

$9,070.30

A $1,000 face value bond with a last price of $98.20 sells for:

$982.

A 4% increase in the price of sugar results in a 3% decrease in the quantity of sugar bought and a 4% increase in the quantity of molasses bought. This indicates that the cross elasticity of demand is:

1.0

Which families with the following income to poverty ratios would be considered "near poor"?

1.23

If the price of coffee increases by 50% and the quantity demanded falls by 10%, then what is the price elasticity of demand for coffee?

1/5

If the Sunset Café reduces their prices by 20%, and the number of customers increases by 40%, what is the elasticity of demand?

2.0

Compute the consumer surplus when the market is at equilibrium.

45000

When the increase in price for a new video game is 10%, the increase in quantity supplied of that new video game is 60%. What is the price elasticity of supply for that video game?

6

Jack has $60 to spend on lunch each week. He eats either at the Taco Hut, which costs $10, or the Pizza Shack, which costs $12. Which of the following combinations is on Jack's budget line?

6 lunches at Taco Hut and 0 lunches at Pizza Shack.

Firms use price discrimination to increase their profits by converting part or all of consumer surplus to producer surplus. Which of the following market conditions is not necessary for a firm to engage in price discrimination?

A firm must have the ability to hide their prices from consumers.

Which of the following are external benefits of a college education?

A more productive work force and thus higher economic growth Higher tax revenues collected over graduates' working lives A more informed electorate

In the long run, which factor of production can a firm NOT adjust?

All factors of production can be adjusted in the long run.

Both the former Soviet Union and China (until quite recently) were highly centrally planned, and virtually all resources were government-owned. Although Russia and China have moved toward market economies, a large portion of each country's resources is still owned by the state. Which of these economies must answer the three basic economic questions?

All of the economies must answer the three basic questions.

Which of the following is most likely to shift the supply curve for pet grooming services leftward?:

An increase in the cost of pet grooming supplies

If an Aspen ski lodge doubles its room rates, what is likely to happen to the demand for lift tickets sold by the lodge?

Demand for lift tickets, a complement good, will fall.

Since nearly all smartphones have built-in cameras, what will happen to the market for traditional cameras?

Demand for traditional cameras will fall, pushing prices lower.

All of the following occur when high productivity individuals are discriminated against in a competitive market except:

Discriminating firms earn higher profits than competing firms.

Suppose you master the art of growing herbs in your garden and sell them for a profit at the local farmer's market. Your neighbor sees your profitable business and decides to do the same. However, with less experience, your neighbor faces a much higher marginal cost curve. Assume the market for herbs operates under perfect competition. How is it possible for both you and your neighbor to sell herbs at the same price?

Each seller produces the herbs until marginal cost equals the market price.

What attribute of natural monopolies discourages new entrants?

Economics of scale

The supply of skateboards decreases, but demand stays the same. What would happen to the equilibrium price in this situation?

Equilibrium price would increase.

Poker players are known to bluff once in a while, meaning that they will make a large bet despite holding inferior cards in an effort to pressure other players to fold their hands. Would bluffing be considered a dominant strategy in poker?

No, because if a player bluffs on every hand, other players will catch on and call his or her bluff.

The game tree below illustrates the payoffs for two runners who can either run in a marathon or stay home. If Runner 1 makes the decision first and can anticipate what Runner 2 will do, what will be the outcome?

Runner 1 will run, and Runner 2 will stay home.

If a city places a $10 tax on every skateboard sold, who ends up with the burden of the tax?

Skateboard consumers and shops will likely share the burden of the tax.

Which of the following is an argument AGAINST free trade?

Some industries need to be protected for some time in order for them to become competitive with foreign firms. Key domestic industries such as oil, steel, and defense must be protected for national security reasons.

_____ refers to the fact that higher wages mean that one can maintain the same standard of living by working fewer hours.

The income effect

Suppose that at a baseball game, you consumed three hot dogs (each priced at $5) and four sodas (each priced at $3). The third hot dog provided a marginal utility of 20, while the fourth soda provided a marginal utility of 15. Could you have maximized your utility with a different consumption bundle?

Yes, you should have consumed more sodas and fewer hot dogs.

Which of the following goods probably has the highest price elasticity of supply?

blue pencils

Jilly's and Pizzazz, two competing hair salons, will advertise whether or not the other salon does. Both salons are using a _____ strategy.

dominant

A Chinese firm sells headphones in the United States for $5. It costs $30 to produce those headphones. This is an example of:

dumping.

Monopoly prices tend to be _____ the corresponding prices in perfectly competitive industries.

higher than

Individuals can improve conservation by:

planting trees and installing solar panels.

A lump-sum tax is a type of _____ tax that takes a fixed amount of tax regardless of income.

regressive

The average fixed cost curve is not U-shaped because

total fixed cost doesn't vary with output, and therefore, average fixed cost declines as more output is produced.

If the price of a product rises above the equilibrium price, the height of the triangle that represents consumer surplus:

will decrease.

A public goods market demand is really a(n) _____ curve because the government will have to provide the good and levy taxes to pay the cost.

willingness-to-pay

Suppose the federal government reduces an effective price floor toward the equilibrium price but not below it. What will happen to the deadweight loss and total surplus?

A. decrease B. Increase

In nearly every example of demand in this book, a negative relationship exists between the market price and the quantity demanded. Why doesn't this relationship exist for a firm operating in a perfectly competitive market?

Because in a perfectly competitive market, each individual firm does not have the market power to set prices. Each individual firm is a price taker.

What happens to consumer surplus and producer surplus if the equilibrium price of a product is $500 but the product currently sells for $200?

Producer surplus decreases, but consumer surplus could either increase or decrease.

Which of the following bundles could not be on the same indifference curve as the others?

3 TVs and 3 computers

A straight linear production possibilities frontier (PPF) means the opportunity cost is:

Constant

Explain the difference between linear production possibilities frontier(PPF) and a bowed PPF.

Constant opportunity costs, whereas a bowed PPF has increasing opportunity costs

When solving for the profit-maximizing equilibrium, Step 1 is to find the:

point at which marginal revenue equals marginal cost.

In which of the following does the government generally NOT aim to ensure in competition for network goods?

poor quality

On the production possibilities frontier (PPF), which of the following illustrates unemployment?

A point inside the PPF

Factories belonging to the General Electric Company dumped polychlorinated biphenyls (PCBs) into New York's Hudson River for almost 40 years before the government ordered them to clean up the toxic sediment. By 2010, the first phase of clean-up was completed. As the next phase begins, you would expect the marginal benefit of the abatement to:

decrease.

Deadweight loss is a loss in:

total surplus.

Which of the following best describes an airport's noise pollution that decreases the value of homes around the airport?

The externality originates from the producer.

MR < P for the monopolist; however MR = P for the competitive firm.

True

The wireless data industry, in which firms compete vigorously against one another for customers, is not considered a perfectly competitive industry. Which of the following industry characteristics make the wireless data industry a non-perfectly competitive industry?

-The market is dominated by a few very large wireless firms. -For wireless firms, long-run economic profits are possible. -Substantial barriers to entry prevent new firms from entering the wireless market.

If you receive 10 units of utility from consuming one cup of coffee and 16 units of utility from consuming two cups of coffee, which of the following is the likely amount of utility you will receive from consuming three cups of coffee?

18 units of utility

The following table outlines the number of units consumed for two products and the total utility for each product. Assume that books cost $5 and pizza slices cost $2. What is the marginal utility per dollar for the third book?

4

When Ed = _____, that means that for every 1% increase in price, quantity demanded declines by 4%. Use the absolute value of elasticity.

4

Suppose you work hard building your business and end up earning zero economic profit for the year. Consider how an economist would evaluate your business. Is this business failing?

No, because the firm would be earning a normal profit.

Most amusement parks in the United States charge a fixed price for admission, which includes unlimited roller coaster rides for the day. Some people attempt to ride the roller coasters as often as possible in order to maximize the value of their admission.

No, riding a roller coaster continuously could lower the rider's total satisfaction.

Over the years, most air pollution policy has been based on:

abatement requirements.

Determinants of demand Select all the factors that might increase the demand for frozen slushies.

( )Warm weather ( )Decrease in the price of soft pretzels

Simon likes to smoke cigars on his porch during the day on weekends. But his neighbor, Frank, can't stand the smell so he avoids grilling while Simon is outside. What is the origin of this externality, and who is affected by it?

The externality originates from a consumer, and the impact is taken by a consumer.

The value of deadweight loss for a perfect price discriminator is _____ an imperfect price discriminator.

less than

Which of these is an expensive drawback of a monopoly?

the resources wasted in maintaining a monopolist's position

If the price of coffee increases from $2.00 to $2.50 per cup, then what is the percentage change in price?

25%

occurs when goods and services are produced and sold to consumers not only at marginal cost but also at minimum average total cost.

Allocative efficiency

_____ is the study of how individuals and firms make strategic decisions to achieve their goals when other parties or factors can influence that outcome.

Game theory

Food trucks have become a $2 billion industry, serving creative, and often healthy, food options in places where traditional food options might be limited. For example, a food truck might stop at a local college campus during lunch time. The truck might stop later at an underprivileged district in the afternoon, and then to a local club scene in the evening. Which of the following are advantages food trucks have over traditional restaurants in terms of land and capital costs?

The physical capital needed to set up a food truck is less than that of a restaurant. Food trucks require little, if any, land, provided they have the proper permits to operate in a public street. Food trucks can seek out demand instead of having to expend resources drawing customers to a fixed location.

In cities around the country, the government provides assistance to families with low incomes to rent apartments at prices capped by the U.S. Department of Housing and Urban Development (HUD), essentially setting a price ceiling on apartments. The designated apartments tend to rent quickly, and tenants are less likely to move once they find an apartment. Assume the price ceiling is set below market equilibrium and no government subsidies are offered to landlords. What are the most likely outcomes in terms of availability of rent-controlled apartments and ongoing maintenance of rent‑controlled apartments?

The price ceiling will cause a shortage of rent‑controlled apartments and the rent‑controlled apartments will be less well maintained than apartments without rent controls.

Suppose you win the lottery and are given a choice to collect either the grand prize of $5 million in 10 annual installments of $500,000 or an immediate one-time payment of $4 million today.

a. 3.9 million b. Based on your calculation, to maximize the present value of your winnings, you should choose $4 million today

Increased trade tensions between the United States and China in recent years have led to tariffs (taxes) being placed on many U.S. agricultural products sold to China. If many of these products are in a perfectly competitive industries,

a. Demand will decrease, and the market price will fall. b. In the short run, firms' profits will decrease. In the long run, some firms will exit the industry.

Assume the market for DVD movies is initially at equilibrium. A decrease in the price of streamed movies, a substitute for DVD movies, will __________ the equilibrium price and ___________ the equilibrium quantity of DVD movies.

decrease; decrease

A common format that is used in digital recorders is called:

an industry standard.

A competitive market will NOT result in a price and output that maximizes social welfare when the:

product or service in question is a public good.

Advanced Printing Systems is a firm in a monopolistically competitive market. If its marginal cost is $17 per unit in the short run, if it is maximizing profit, and if it is selling at the equilibrium quantity, what is its marginal revenue?

$17

Metropolitan Power and Light is a monopoly in the electricity generation and distribution industry. One aspect of its being heavily regulated is that it is required to follow the average cost pricing rule. If its average total cost equals $2 per kilowatt hour, what price is it required to charge?

$2

Miranda and Jason are in the tutoring business. Miranda is willing to tutor as long as she gets $20, while Jason will not tutor unless he gets $35. If the most that someone would pay for tutoring is $30, how much producer surplus is earned?

$20

Frank recently lost his job as a photo lab technician. While he searches for a new occupation, his spaghetti purchases increases. For Frank, spaghetti is

an inferior good

A comparative advantage occurs when:

a country has a lower opportunity cost of producing a good than another country.

The third worker adds 15 units to total production. When the fourth worker is hired, she adds 8 units to total production. The company has:

diminishing marginal returns.

X-inefficiency refers to:

monopolies being protected from competitive pressures and not having to act efficiently.

Today, trade represents about _____ of U.S. GDP.

over 30%

Suppose the equilibrium price in a market is $10. The government sets a maximum price of $12. This price of $12 is an example of a(n):

price ceiling.

Christine recently earned a promotion at work, raising her income by 40%. As a result, she now attends twice as many concerts as before. What is Christine's income elasticity of demand for concerts?

2.50

Ocean Magic is a surfboard company that sells surfboards in a perfectly competitive market. The market price in the long run for surfboards is $325. If Ocean Magic sells 37 surfboards at $325, what is its long-run average total cost?

$325

Which of the following prices would be a binding price floor for strawberries if the current equilibrium price is $3 per pound?

$4

Assume that Country A produces only two goods, X and Y, and that its production possibilities frontier (PPF) is linear. If the country can produce 2,000 units of X or 40,000 units of Y each year, what is the opportunity cost of producing 1 unit of X?

20 of Y

Assume that the population of Lauronia increased and so did its total production. What would this look like on a graph of the production possibilities frontier?

A new curve that is to the right of the original curve

Consider the demand for socks. What would cause a movement from one point on the demand curve to a point further down the curve?

A big sale on socks.

What is the difference between a positive question and a normative question?

A positive question concerns what is; a normative question concerns what should be.

Over the past decade, many American candy companies have opened factories in Mexico and Canada to produce candy. The companies, including Hershey Company, Brach's Confections, and Ferrara Pan, then ship candy back to the United States for sale. Although lower wages in Mexico might explain part of this move, wages in Canada are comparable to U.S. wages. Price floors (price supports) for the sugar industry encouraged American candy companies to move production out of the United States. Describe how the enactment of a sugar price floor impacted the market for candy in the United States, resulting in the movement of manufacturing.

A price support will shift the supply curve to the left and raise the price of the input used to produce candy in the United States.

Suppose the equilibrium price in a market is $10. The government sets a price ceiling of $7. What is most likely to occur?

A shortage is most likely to occur.

Which of these is NOT an example of industrial agglomeration?

A single mother moves closer to a large city so she has more employment opportunities.

_____ is an example of something that might be used to give a firm a cost advantage in foreign markets.

A state subsidy

If the government guarantees sugar farmers a price of $1 per pound when the market equilibrium price is actually $0.50 per pound, which of the following will occur?

A surplus of sugar will occur, increasing inefficiency.

Whenever a new car with satellite radio capability is purchased, the buyer is typically offered a free 90-day subscription to a satellite radio service, such as SiriusXM. What type of competitive strategy would this be?

A teaser strategy

Amazon introduced its home virtual assistant Alexa in 2015, which quickly became the most popular voice assistant product on the market. However, Google countered aggressively in 2017 with its own voice‑assisted Google Assistant device and launched a major marketing campaign to compete against Amazon. What are possible bundling strategies for the two firms?

Amazon could: allow consumers to purchase products and make use of Prime membership benefits using Alexa‑enabled devices. Google could: allow consumers to access its worldwide information network through its Google Assistant devices.

Suppose that the city of Rentville sets a price ceiling of $800 a month on all apartments, although the market equilibrium rent is $1,000. Which of the following is least likely to occur?

An increase in the quantity of existing apartments in Rentville.

A person decides to unsubscribe from a popular social networking site. Which of following then is true?

The individual leaving the social network is not imposing a cost on anyone; therefore, there is no negative externality.

Assume there is a positive relationship between aging and cholesterol levels. Please complete each sentence.

As the world population ages, purchases of cholesterol drugs will likely (rise) b. A change in (demand) for cholesterol drugs will result.

Suppose that a person's bank opens up a dozen more automatic teller machines (ATMs) throughout the city, making it much easier to find one. What happens to the demand and supply for this network as it expands?

Both demand and supply increase.

Starting from point E, which point is the most likely outcome of an improvement in the technology used for the production of a good, holding all else constant?

C

Which act forbids a company from holding the stock of its competitors?

Clayton Act

Carolina is trying to sell her car, and the lowest amount she is willing to accept is $2,000. Abdul is interested in buying the car, and although he is willing to pay $2,500, he negotiates a price of $2,100. How much consumer surplus does Abdul attain, and what is the total surplus?

Consumer surplus = $400; Total surplus = $500

The last roll of sushi gave Enrique 20 units of utility and cost $5, while the last plate of sashimi gave Enrique 30 units of utility and cost $10. To maximize utility, how should Enrique change his consumption?

He should consume more sushi and less sashimi.

Some experts suggest that if there were no immigration, the United States population would not be growing. The average age in the United States is increasing. What is the likely effect of increased immigration and an aging population on society's income distribution?

Immigration and the aging of the population both tend to decrease average household income.

Which of these statements are NOT true about economic profit?

In order to sustain a business in the long run, economic profit must be greater than zero.

_____ is a flow measure reflecting the funds received by individuals or households over a period of time.

Income

At the current market price in the market for smartphones, the quantity of buyers is larger than the quantity of sellers. Given this situation, we can expect the market price of smartphones to:

Increase

The United States has an absolute advantage in making many goods, such as short-sleeved cotton golf shirts. Why do Indonesia and Bangladesh make these shirts and export them to the United States? They export shirts to us because

Indonesia and Bangladesh have a comparative advantage.

The 1940s and 1950s saw the introduction of workers' compensation, an insurance program that paid employees a portion of their wages if they were injured on the job and couldn't work. What effect does this have on the market labor supply curve in dangerous working environments such as manufacturing?

It causes the market labor supply curve to shift right.

Unions that represent airline pilots have been very successful in negotiating high salaries and generous benefits packages for pilots, while unions that represent flight attendants have not been nearly as successful. Why do unions that represent airline pilots appear to have more collective bargaining power than unions that represent flight attendants?

It is costlier and more difficult for airlines to replace their entire workforce of pilots than flight attendants.

Franklin buys bananas and oranges each week. The price of bananas decreases from $1.29 per pound to $1.17 per pound. What happens to Franklin's budget line?

It pivots outward.

If Japan can produce 3 rice cakes or 6 seaweed salads in an hour, while Indonesia can produce 2 rice cakes or 5 seaweed salads in an hour, which of the following is true?

Japan has a comparative advantage in producing both goods.

According to the following diagram, how much labor would be hired and what wage would be paid by a firm that is competitive in the product market and a monopsonist in the labor market?

L0 and W2

Honda and Toyota both produce minivans. Both the Odyssey (Honda) and the Sienna (Toyota) have seating for eight, leather interior, GPS, rear-seat entertainment, back-up camera sensors, power-lift gates, multiple-zone climate controls, Bluetooth connectivity, and adjustable power seats with memory foam. The Sienna is usually a bit more expensive, but the main difference between the two is the second-row seating. In the Sienna, the seats are reclining captain's chairs, and in the Odyssey, the seats are lighter and easier to remove. Which aspect(s) of oligopoly is (are) demonstrated in this example of two companies' minivans?

Oligopolists compete by product differentiation.

The market equilibrium price exists when:

quantity supplied and quantity demanded are equal.

Suppose that owners refill their pet's prescription every month. If the government eliminates all taxes on pet medications, who will benefit more?

Pet owners would receive most of the tax savings.

_____ is the act of using low prices to force foreign firms out of business and then raising prices in the long run to make up for short-run losses.

Predatory pricing

What happens to price and quantity when the external costs of production are taken into consideration by producers?

Price increases, and quantity decreases.

occurs when goods and services are produced and sold to consumers at their lowest opportunity cost.

Production efficiency

_____ is the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs.

Sustainable development

You normally stay at home on Wednesday nights and study. However, next Wednesday night, your best friend is having his big 21st birthday party. What might be the opportunity cost of going to the party?

The benefit (such as a higher homework or exam grade) that you would have gained from studying that night.

When the price of a good on one's budget line decreases, how does this affect the budget line?

The budget line pivots outward.

In the fictitious country of Amelia, the government taxes the wealthier residents and gives that tax money to the poorer residents. What would this taxing and transfer payment look like on the Lorenz curve?

The curve would bend closer to the 45-degree line.

Assume a competitive industry is in long-run equilibrium and firms in the industry are earning zero economic profit. Now assume that production technology improves such that average total costs decline by $5 per unit. How will the industry move to a new long-run equilibrium?

The decline in costs will result in economic profits in the short run. In the long run, firms will enter the market causing the price to fall until all firms only earn normal profits.

The United Nations reports data on income distribution for different countries as a ratio of the income of the richest 10% to the income of the poorest 10%. If the ratio for Japan is 4.5 and the ratio for the United States is 15.9, which of the following statements is correct?

The distribution of income is more equal in Japan.

How does the equilibrium price in a monopolistically competitive market compare to the equilibrium price in a perfectly competitive market?

The equilibrium price is higher in a monopolistically competitive market.

Economic theory states that the firm should shut down if market price falls below average variable costs at the profit maximizing output. The firm will minimize losses by stopping production when revenue is not sufficient to cover variable costs. In the business world, the decision to shut down a firm is often more complicated. Under what circumstances might a firm continue to operate when prices are below average variable costs?

The firm might continue to operate if profit could be generated in the long run.

If the market equilibrium wage for entry-level fast-food workers is $10 an hour, while the minimum wage is $8, what impact does the minimum wage have in this industry?

The minimum wage has no effect in this market.

Over the past few decades, the cost of producing computers has decreased. This has caused computer prices to fall as well. According to the law of demand, what will happen in the market for computers based on this price change?

The quantity demanded will increase.

In 1995, President Clinton threatened a 100% tariff on Japanese luxury cars like the Acura Legend and the Infiniti. If those cars were selling for an average of $35,000, what would be the effect of the tariff?

The same cars would sell for about $70,000.

The government places excise (per unit) taxes on a variety of goods consumers buy, including gasoline, cigarettes, and alcoholic beverages. How would you describe the demand elasticity of goods most likely to be subject to excise taxes?

They tend to be inelastic

Assume that demand for gasoline is inelastic. If a gas station increases the price of its gasoline, what will happen to its total revenue from gasoline sales?

Total revenue will increase.

Which of these is a factor that can limit the benefits of trade?

Transportation costs are involved in moving goods and services from one country to another.

Which of the following is a cost of union membership?

Union members may lose their job if a strike fails.

Which of the following is a virtual network?

a search engine or a mobile phone service

Which of the following is an argument AGAINST free trade?

Workers in some developing countries have poor working conditions.

The black rhinoceros is an endangered animal. Its horn is considered a powerful aphrodisiac in many Asian countries, and a single horn fetches many thousands of dollars in the black market, creating a great incentive for poachers. Unlike other stories of endangered species, this one might have a simple solution. Conservationists could simply capture as many rhinos as possible and remove their horns, reducing the incentive to poach. Do you think this will help reduce poaching?

Yes, removing the horns eliminates the incentives to kill black rhinoceros

Is a decision to spend four years of one's life and tens of thousands of dollars earning a college degree based on an incentive?

Yes. The potential long-term benefits of college more than offset the costs of college.

If Stephen Curry is better than you at both basketball and mowing grass, why would he still hire you to mow his lawn? Because Stephen Curry has

a comparative advantage in basketball, and you have a comparative advantage in lawn mowing.

In 2009, the top eleven tire manufacturers controlled 74% of the global tire market. The top three producers (Michelin, Bridgestone, and Goodyear) accounted for almost half of that market. How would you describe this oligopoly?

a few dominant firms and a number of smaller firms that sell a differentiated product

A shadow price is:

a monetary value that is assigned to a cost that is difficult to measure because it is based on assumptions.

Over Spring Break, Grace plans to better herself through the following three activities: Five cooking classes: each class costs $30, and the fifth class gives Grace a marginal utility of 60. Four private Chinese lessons: each lesson costs $50, and the fourth lesson gives Grace a marginal utility of 75. Three personal training sessions in tennis: each session costs $80, and the third session gives Grace a marginal utility of 80.

a. 2 b. 1.5 c. 1 d. reduce the number of tennis lessons and increase the number of cooking classes

Assume that the health care industry becomes a single‑payer system. For example, Medicare becomes available for all residents, regardless of age. a. b.

a. Individuals know more about their health conditions than an insurer would and exploit this information to their advantage. b. Doctors know more about the medical conditions of their patients than the patients themselves know and exploit this information to their advantage.

If the United States has a comparative advantage in the production of strawberries compared to Iceland, how might trade between these two countries affect the prices of strawberries in each country?

a. The pre-trade price of strawberries will likely be: lower in the U.S. than in Iceland. b. rise in the U.S. and fall in Iceland.

Stores depend on feedback from their customers as a way to improve their business practices and to market their products. To encourage customers to offer feedback, stores will sometimes offer an incentive, such as a discount on a future purchase or additional reward points in a frequent shopper program. a.The incentive compensates customers for the _____ of the their time to complete the survey. b. Use the key principles of economics to identify one or more reasons why incentives work to convince some, but not all, customers to leave feedback.

a. opportunity cost b. - people differ in the opportunity costs of their time. - people differ in their assessments of the value of the incentive offered relative to the opportunity costs of their time.

a. What factors might explain why poverty rates are not consistent across all states? The differences could be due to b. Economists believe the minimum wage also explains poverty rate differences across states. Choose the option that explains why the minimum wage may not reduce the poverty rate. The minimum wage has

a. substance abuse. the availability of jobs. differences in human capital. b. no impact on the number of people out of the labor force.

An outward parallel shift of the production possibility frontier signals:

an expansion of the productive capacity of the economy. That would mean we can now produce more of a specific good because we now have the means to produce more thanks to technology and economic funding.

Which of the following would cause a decrease in consumer surplus?

an increase in prices due to a sales tax

Suppose the market for tomatoes is in equilibrium, and events occur that simultaneously shift both the demand and supply curves to the right. If this is the only information you have, what can you say about how the equilibrium price or quantity would be affected?

quantity would increase

Economic discrimination occurs when workers of equal ability are discriminated against because of:

race

In order to host the Summer Olympics in Tokyo in 2020, Japan's government reportedly spent 7 times its initial proposed budget. How does this increased expenditure change Japan's rate of return calculation of hosting the Olympics (assuming no change in future revenues)? The increased expenditure would

decrease the rate of return.

Fat's Meats is in an oligopoly market. According to the kinked demand curve model, if it raises its prices to increase profit, its competitors will:

do nothing.

In the mid-1970s, Sony released a Beta format videotape, which could be played only on Sony's Betamax video players. Soon afterward, the competing Video Home System (VHS) format, which could be played only on VHS video players, was launched. Fewer and fewer consumers purchased Betamax video players, and by the late 1980s, Beta was replaced almost entirely by the VHS format. The Beta format likely never reached the:

downward-sloping portion of the network market demand curve.

Demand curves are _____-sloping because as price decreases, quantity demanded _____.

downward; increases

Possible solutions to common resource problems can involve establishing private property rights, using government policy to restrict access to the resource, or using informal organizations that restrict each user's benefits from the resource. All of these are attempts to make the common resource goods:

exclusive.

The _____ consumers there are who would be likely to purchase a given product, the lower its market demand will be, and the demand curve will shift _____.

fewer; leftward

Roughly half of all marriages in the United States end in divorce. A rising divorce rate would likely lead to

greater income inequality and an increase in the poverty rate.

If the demand for a product is inelastic and price rises, the revenue gained would be _____ than the revenue lost, resulting in a(n) _____ of a firm's total revenue.

greater; increase

In the United States, heavy street‑cleaning machines driven by one person sweep the streets. In China and India, groups of people use brooms to do the same job. Explain why this difference in techniques occurs. The difference occurs because

labor resources in China and India are relatively more abundant than capital.

Would an excise tax placed on cereal be more likely or less likely to be passed on to consumers than an excise tax on wireless phone and data services?

less likely, because the price elasticity of demand for cereal is greater than that for wireless phone and data services.

In May 2011, the European Union (EU) announced that it would impose taxes in the range of 4% to 8% on coated paper imported from China, alleging that China was engaging in dumping. To prove its case, the EU had to show that the Chinese were selling paper at a price that was _____ it would be if China was not dumping.

less than

A demand curve that incorporates only the private benefits of consumption when positive externalities exist would:

lie below and to the left of the demand curve that incorporates both the private and social benefits.

Suppose the equilibrium price in a market is $10. The government sets a minimum price in the market of $8. This price of $8 is an example of a(n):

price floor

Why are marginal revenue and price equal for competitive firms? Price equals marginal revenue because

price is constant for all levels of output.

At some point in the future, a country that produces more capital goods than consumer goods will have a larger PPF than a country that produces more consumption goods. This occurs because

producing capital goods is an investment that helps stimulate the economy.

Which of the following is a characteristic of monopolistic competition but not perfect competition?

product differentiation

Which of the following is a characteristic of both monopoly and monopolistic competition? Both market structures involve

product differentiation.

A competitive market will NOT result in a price and output that maximizes social welfare when the:

product or service in question is a common resource.

During World War II, the production of synthetic rubber increased dramatically in response to high natural rubber prices and the unstable supply of natural rubber. The new substitute allowed industries that used rubber, such as the tire industry, to achieve what type of efficiency?

production efficiency

Jeishca is a purveyor of hot tubs. When a customer purchases a hot tub, Jeishca's employees deliver and install the hot tub at the buyer's home. Jeishca recently purchased new better-mileage trucks in order to bring down his cost of delivering hot tubs. What type of efficiency are the new trucks allowing Jeishca's business to achieve?

production efficiency

Metropolitan Power and Light is a monopoly in the electrical generation and distribution industry. It has spent a tremendous amount of money in lobbying efforts to limit the number of permits granted for wind and solar power generators. The company fears that these generators will create competition in the market. This lobbying effort is an example of:

rent seeking.

Why does a quota generate a larger loss to the importing country than a tariff that restricts imports to the same quantity? An import quota creates more loss because

the government does not collect any tax revenues from an import quota.

One view of college education is that the degree is at least partly a way of showing prospective employers certain aspects of the applicant. Aspects include that the applicant is reasonably intelligent, trainable, and has a certain degree of discipline. This view exemplifies the notion of college as a signalling device

the notion of college as a signalling device

What is rent in the resource market?

the payment to landowners for the use of their land as a factor of production

Monopolistic exploitation of labor occurs when firms with monopoly power hire labor:

up to the point at which wage equals marginal revenue product of labor.

If clearly some units were not being used on the production possibility curve, then:

the point would move from the curve to the inside of the curve.

The demand for labor will be MORE elastic when:

the price elasticity of demand for the product is higher.

Which of these is NOT one of the six determinants of supply?

the price of the good

What is the tipping point?

the quantity from which network effects are strong enough to continue building the network

Because people have little incentive to use resources owned by the community at large in a sustainable fashion, they tend to be overexploited and depleted. This is an example of:

the tragedy of the commons.

In 2018, two regional airline carriers, Alaska Airlines and Virgin America, agreed to merge into one larger airline under the Alaska Airlines name. Although the merger would reduce the number of airlines serving the U.S. market, and hence raise the HHI, the argument made by Alaska Airlines is that the overall airline industry would become more competitive, not less. Take a look at Alaska Airlines's and Virgin America's old route maps (they can be searched using Google) and compare them to the current Alaska Airlines route map. How might the larger airline be a more competitive player in the airline market?

Because a larger airline can attract more customers and increase its market share to a level similar to that of other leading airlines

If the government offers a tax deduction to companies producing solar panels, what will happen in the market for solar panels?

The supply curve will shift to the right, increasing supply.

In the U.S., there is much more popular concern about the fairness of international trade than the fairness of interstate trade within the U.S. Which of following statements correctly compares interstate trade and international trade?

There are differences in comparative advantage across states, just as there are across countries.

Can a country which does not have an absolute advantage in producing a good or service still benefit from trade?

Yes; a country can still benefit from trade as long as the country has a comparative advantage in producing a good or service

Suppose that college tuition is eliminated for every admitted student to a public community college or a public 4‑year college or university.

a. Such a policy would likely lead to an increase in human capital, conferring a benefit b. Such a policy would also lead to higher taxes, conferring a cost c. Such a policy would also lead to a fall in enrollment at private colleges and universities.

Suppose that to take this class, you had to pay for tuition, which is nonrefundable, a registration fee, a laptop computer, and a textbook. Suppose, additionally, that you are considering dropping the course. Which of the following would be sunk costs and therefore irrelevant to your decision?

the registration fee. tuition.

Today, the United States has an average tariff on imported goods of roughly:

2%.

If the price of beef rises significantly, what will happen in the market for fast-food hamburgers assuming nothing else happens in the market?

(X) Supply increases, pushing prices higher.

The tragedy of the commons pertains to which type of good or resource? Which of the following scenarios illustrates the tragedy of the commons?

Common property resources A group of families who earn their livelihoods fishing the public waters of Lake Johnson are repeatedly unable to set limits on the fish take of each family. The result is the permanent loss of the lake's fish species.

One can typically find a high-quality color laser printer for $300, which has four pre-installed color toner cartridges that are only half-filled. When the toner is used up, replacing all four cartridges costs over $400. Why would companies charge more to replace the toner than to buy the printer itself?

Companies have more monopoly power in the toner cartridge market than in the printer market.

Economist argue that consumers are better off when competition is strong and monopolies are limited to certain industries. One reason is the deadweight loss associated with monopoly markets and market power. Which of the following is an example of deadweight loss in monopoly markets?

Consumer surplus lost because prices are higher and output is lower under monopolistic conditions

Suppose that the local food store lowers the price of hot dogs. Which of the following would likely occur as a result?

The quantity demanded of hot dogs will increase, and the demand for hot dog buns will shift to the right.

The Federal Reserve Bank of Atlanta releases its monthly Wage Growth Tracker to study trends in wages across various industries. One interesting issue is whether wages rise faster for those who stay in their current jobs (job stayers) or those who seek new opportunities (job switchers). According to the data, job stayers tend to do better than job switchers during a recession. But when the labor market is strong, job switchers experience higher wage growth than job stayers.

a. labor demand decreases and job switchers cannot find jobs with higher wages. b. labor demand increases and job switchers can find jobs with higher wages.

A leftward shift of a supply curve would be the result of:

an increase in the price of an alternative product that could be produced with the same resources.

China's rising middle class has resulted in a surge of luxury food imports such as lobsters from the United States. China's demand for U.S. lobsters is so great that fishermen in Maine (where most U.S. lobsters are caught) have a tough time keeping up. Which of the following best explains how China's increased demand for lobsters affect consumers and producers of lobsters in the United States? An increase in China's demand for U.S. lobsters will

benefit U.S. fishermen who will sell more lobsters at a higher price. Consumers of lobsters in the United States will experience a rise in the price for lobsters.

Prior to the health care reform which made it illegal for insurance companies to deny health insurance to those with pre-existing conditions, such as heart problems, some employees felt trapped in their jobs. Employees felt trapped because their employer provided health insurance that was not transferable to other companies. This "job lock" phenomenon was especially severe when someone in the employee's family had a pre-existing condition that prevented that person from getting private health insurance at reasonable rates. What are the effects of this type of inflexibility on labor markets? This sort of inflexibility in labor markets can lead to

decreases in morale and productivity because workers feel they must keep their job to maintain their insurance.

The opioid epidemic causing a staggering number of deaths each year in the United States is largely caused by two drugs: heroin and fentanyl. Much of the heroin is supplied by several major organized Mexican cartels while the much stronger fentanyl is mostly produced in hundreds of labs (big and small) in China. The market structure for heroin can be considered as an oligopoly that operates as a monopoly. On the other hand, the fentanyl industry is less organized in terms of cartel organization and therefore more competitive. How do the differences in the organization of both industries explain why deaths from fentanyl have skyrocketed in recent years? The organized heroin cartel

has the ability to control quantity and raise the prices. The more competitive fentanyl industry makes more of the drug available at a lower price.

In the market for many construction products (such as wallboard and lumber), production by all firms is based on government standards. This would be an example of:

homogeneous products.

The demand curve for a perfectly elastic product will be:

horizontal.

Competing airlines occasionally merge to create a larger airline. According to antitrust laws, all of the following help determine whether such mergers might be uncompetitive except

how many employees the airline has.

Reality television has altered the labor market for entertainment. Aspiring actors and actresses no longer need to use an agent and wait years for an opportunity to audition for a specific role. Instead, aspiring actors and actresses can freely audition for one of the many reality shows, such as Big Brother, The Voice, and America's Got Talent, by submitting a video online. At the same time, producers of reality television shows are constantly looking to cast new people each season to keep pace with the huge popularity of such programming. How has reality television changed the labor market for entertainers?

it has increased labor supply and deman

The cable TV company in Taryn's neighborhood is the only firm from which Taryn can get cable TV for her home. This is an example of which type of market structure?

monopoly

In 2014, small motorized skateboards (known as hoverboards) saw a huge spike in sales as their popularity rose and more companies started producing them. In 2015, a safety risk was exposed when it was reported that over 100 incidences of hoverboards catching fire or exploding occurred, causing injuries. This led to a massive recall of hoverboards as manufacturers had to retool their products and fix existing products. Also, it led to a ban on hoverboards on airlines and in many schools. This massive recall and ban on hoverboards affected the equilibrium price and quantity of hoverboards.

quantity fell and the effect on the price indeterminate

Grim trigger, trembling hand trigger, and tit-for-tat are all strategies that can be used in _____ games.

repeated

Which of the following best describes salmon fillets at the grocery store?

rival and exclusive

Common resource goods are:

rival and nonexclusive.

Which of the following is a market-based environmental policy?

subsidizing the purchase of higher mileage vehicles

When the price of product A rises, the quantity of product B that is purchased increases. Products A and B are:

substitutes

Your friend tells you the following: "The law of demand does not work ALL the time. For example, think about the demand for luxury cars (e.g., BMWs, Porshe, etc.). Demand for such cars increases when the price of the car increases." Your friend is:

wrong; demand is not the same as quantity demanded. At higher price of good, quantity demanded will be low

Metropolitan Power and Light is a monopoly in the electrical generation and distribution industry. Because it does not face any competition in its industry, it has become lax in research and development and has not made any improvements to its efficiency. It also spends lavishly on its corporate retreats because it has a high level of guaranteed profits every year. Its actions are an example of:

x-inefficiency.

In 2007, the Wall Street Journal reported on a dispute in Bend, Oregon. Susan Taylor decided to hang her laundry out to dry on a clothesline. Neighbors said it was unsightly. Susan said she was saving energy. Could the Coase theorem work in this case?

yes, if transaction costs are minimal

The United States exports more in _____ than it imports.

capital goods

In the short run, an expected future price reduction will cause a seller to change the amount they supply in the present. How would this be illustrated on a supply graph?

a new supply curve to the right of the original curve

Research by Richard B. Freeman of Harvard University suggests that there is a core of poor people who stay poor because they have physical disabilities, suffer from substance abuse, or are unable to work for a variety of other reasons. This suggests that:

there should be a different kind of poverty program for this core group.

The most common type of price discrimination is _____ price discrimination.

third-degree

Consider the relationship between total utility and marginal utility as an individual consumes more units of a good. When marginal utility falls,

total utility rises, because each additional unit consumed adds to total utility, although the increments of additional utility diminish.

A _____ strategy allows for a mistake by your opponent before you retaliate.

trembling hand trigger

Airline ticket prices typically increase during the holidays. Madeline paid $800 for a ticket to San Francisco over the holiday break. Four months ago, she paid $450 to fly to San Francisco. Who benefits from this price increase?

The airlines still able to sell tickets during the holiday season benefit.

If Evelyn writes a hit song for her band and copyrights do not exist, then what would be the likely outcome?

Without copyrights, anyone can take Evelyn's song and profit off of it.

Why does the marginal utility decline as the consumption of one product or activity increases?

Consumers eventually become sated once they have consumed a certain amount of any commodity.

Fat's Meats is part of the cartel that controls the kielbasa industry. Which of the following would cause instability in this cartel?

Fat's Meats cheats and sells more kielbasa than it agreed to.

Which of the following is an example of a quota?

The Spanish government limits the number of pencils that can be imported from China.

The United States exports more in _____ than it imports.

industrial supplies

For most automobile manufacturers, what happens to the elasticity of supply over time?

It increases

Ocean Magic is a surfboard company that sells surfboards in a competitive market. What would happen when the market price for surfboards falls below Ocean Magic's average variable cost?

The company would have to shut down manufacturing in order to minimize losses.

Whenever a new innovation such as a motorized hoverboard or a new rental scooter program is launched, one firm will generally enjoy market power for an initial period. However, it doesn't take long before competition enters.

a. Because barriers to entry give innovators market power and control over price. b. Because shortly after a new electronic product appears, other firms often introduce similar, though not identical, products to compete for profits.

The ninth worker adds 15 units to total production. When the tenth worker is hired, he adds 12 units to total production. The company has:

diminishing marginal returns.

There is an increase in price for ice cream cones, but quantity demanded and quantity supplied stayed the same. What had to have happened to supply and demand?

There was an increase in demand and a decrease in supply.

Whenever prices deviate from equilibrium, total surplus falls, resulting in:

a deadweight loss.

The demand for labor is equal to the value of the marginal _____ for competitive firms.

product of labor

Using a _____ strategy means permanently retaliating to any defection by your opponent.

grim trigger

In 2014, Malala Yousafzai won the Nobel Peace Prize. Her courage and action expanded educational opportunities for girls who were barred from going to school in their countries. She faced grave dangers in her activist role, including nearly being killed by the Taliban in her own nation of Pakistan. Her efforts led to countless children enjoying the freedom to go to school. Select the ways in which her efforts to increase the number of young girls attending school will help reduce poverty and result in a more peaceful planet.

By increasing the likelihood that subsequent generations of children will also be educated. By raising the level of human capital and thus labor force participation among women.

The following chart is from the Web site of the Bureau of Labor Statistics. Data are 2010 annual averages for persons age 25 and over, and earnings are for full-time wage and salary workers. According to the chart, which of the following is correct?

Earnings are positively related—and the unemployment rate inversely related—to level of education.

Remittances from developed countries to developing countries amount to over $500 billion each year. These funds are sent to their home countries by migrants working in developed nations. Which of the following statements is true? When migrant workers send remittances to their home country,

both the developed and the developing country benefit from such financial transactions.

In the Canadian province of Northern Territories in the Arctic, ice roads are an important means of transportation during the winter months. These are pathways for cars and trucks made on frozen lakes enabling trucks to reach remote mines that generate many jobs. However, in 2017, the 248-mile Tibbitt to Contwoyto Winter Road faced a shorter season due to warmer weather that delayed the freezing of the lakes. Moreover, the thawing permafrost surrounding the area releases carbon dioxide and methane trapped underneath, adding greenhouse gases to the atmosphere. Each of the following is an external cost faced by residents of the Northern Territories as a result of climate change except one. Which is the exception?

Higher wages, owing to labor shortages associated with seasonal workers' inability to enter the region during winter

Assuming everything else stays the same, an increase in the price of smartphones will __________ of smartphones.

Increase the quantity supplied

What should the government do in order to reduce the effects of a shortage caused by a price ceiling?

It should raise the price ceiling.

If demand for a good is inelastic, what would the demand curve for this good look like?

It would be downward sloping and relatively flat.

Why do perfectly competitive firms sell their products only at the market price? Perfectly competitive firms

cannot charge more than other firms lest they sell nothing, and they have no incentive to sell at a lower price.

Increasing the capital used throughout the economy, usually brought about by investment, is known as:

capital accumulation.

Dubai created an indoor ski resort in the desert through the use of:

capital and innovation.

Government and employer subsidies to reduce the price of health insurance have important benefits to the individual in terms of improved health. In addition, society overall can benefit from higher levels of health care coverage. Which of the following are external benefits that may result from increased health care coverage?

Less waiting for major treatments. Reduced usage of expensive emergency room visits. Increased productivity for employers, as fewer sick days are taken by workers.

Expanding trade in general benefits all countries, or they would not willingly engage in trade. But we also know that consumers and society often gain, while particular industries or workers lose. Because society and consumers gain, how might the government compensate the few losers for their loss? Our government provides

compensation in the form of trade assistance to those industries harmed by trade agreements.

Loyal customers would _____ a product when its price increases. This means that their demand for that product is _____.

continue to buy; inelastic

Which of the following is NOT a factor that affects the elasticity of demand for labor?

corporate profit margin in the industry

Assume that the market price in a small network with fixed capacity is $12. What happens to the market price when there is a network expansion?

The market price rises above $12.

Suppose that a firm in an oligopoly market faces a kinked demand curve. If its marginal cost decreases, the firm will:

produce the same quantity and charge the same price unless marginal cost moves out of the range of discontinuity in marginal revenue

A competitive market will NOT result in a price and output that maximizes social welfare when the:

production or consumption of the good or service creates externalities.

Consider the budget line for a consumer who can purchase only two goods. Assume the consumer receives no utility from saving and is not sated in either good.How will a consumer change his or her purchasing habits if the price of one of the goods decreases?

purchase more of both goods, because the purchasing power of the consumer increases.

The GI Bill, begun in 1944 to help veterans of military service (commonly referred to as GIs) returning from World War II, supplied cash payments for tuition and expenses for veterans who attended college. This would cause a _____ shift of the _____ curve in the market for investment in human capital.

rightward; supply

According to the Coase theorem, what will result if a bargain is struck between beneficiaries and victims of an externality if transaction costs are minimal?

the socially optimal level of production

Suppose Tamika and Raoul work as cabin attendants for one of three major airlines. Their labor market is NOT considered competitive because:

there are relatively few airlines, which means there are not many buyers of cabin attendants.

Rocco's Studio offers lessons in Latin dance styles for $50 per session. Currently Rocco has three dance instructors, who were able to give a total of 40 sessions last week. This week, he hired a fourth dance instructor specializing in samba, and the four instructors together gave a total of 52 sessions. What is the marginal revenue product of the fourth dance instructor?

$600

In 2015, United Airlines and Orbitz Travel sued a 22-year-old person who created the Web site skiplagged.com aimed at helping travelers save money using a technique called "hidden‑city ticketing" (CNN Business, May 1, 2015). Hidden-city ticketing works when a passenger wants to travel nonstop between an airline's major hubs but can find a less expensive fare by booking a connecting flight. The passenger travels on the first leg of the flight and does not take the connecting flight. An example would be a passenger who wanted to travel from Houston to Denver on United Airlines. The website might find a cheaper fair available from Houston to Colorado Springs with a connection in Denver. The passenger can purchase the cheaper flight, fly the first leg, and stay in Denver. Why would an airline charge more for a single flight than one that continues onwards to another destination?

Airlines charge a higher price for nonstop flights because they face little competition from other airlines that require stops at their own hubs.

In 2018, cities including Seattle and San Francisco passed laws banning the use of plastic disposable straws because they are harmful to the environment (because plastic does not easily biodegrade) and to marine life (which ingest straws that end up in the ocean). Opponents point out that such bans may result in unintended monetary cost as well as external cost. Which of the following describes potential costs that may arise as a result of these new laws? Select all that apply.

Compostable straws are an alternative to disposable straws. For compostable straws to break down properly they need to be disposed of in a special commercial composter, an infrastructure that needs to be created. Alternatives to plastic straws cost at least 10 times more than the current price of plastic straws. Straws made of alternative materials lack the flexibility of plastic straws. This makes it harder for people with disabilities, seniors, and children to use them.

If a technology company introduces a new gadget to the market which creates long lines of eager customers at stores and some of them even walk away empty handed, what is true about this market?

Demand exceeds supply and a shortage occurs

A monopolist faces a downward-sloping demand curve, so what happens to marginal revenue as output increases?

Marginal revenue decreases.

Delta Technologies, Inc., operates in a perfectly competitive market and has experienced economies of scale because of advanced technologies that have allowed it to make production more efficient. Delta Technologies, Inc., is in which type of industry?

decreasing cost industry

Suppose the only two gas stations in town have a secret agreement to maintain high gas prices to their mutual benefit. If one gas station decides to try to gain some market share by lowering its prices for a day and the other gas station retaliates by permanently lowering its prices, the retaliating gas station has employed a _____ strategy.

grim trigger