Micro Exam 5
In 2017, full-time workers aged 25 and over with a college degree earned ________ school dropouts. A) 2.5 times as much as high B) roughly the same amount as C) 20 times as much as D) 5 times as much as
A) 2.5 times as much as high
Assume a hypothetical case where an industry begins as perfect competition and then becomes a monopoly. Which of the following statements comparing the conditions in the industry under both market structures is true? A) A monopoly will produce less and charge a higher price than would a perfectly competitive industry producing the same good. B) A monopoly will produce more and advertise more than would a perfectly competitive industry producing the same good. C) A monopoly will produce less and charge a lower price than would a perfectly competitive industry producing the same good. D) A monopoly will produce more and charge a higher price than would a perfectly competitive industry producing the same good.
A) A monopoly will produce less and charge a higher price than would a perfectly competitive industry producing the same good.
Consider three pricing strategies that the firm can pursue: a.optimal two-part tariff pricing b.perfect price discrimination c.single-price monopoly pricing Of these three strategies, which is most beneficial to society as a whole? A) Both perfect price discrimination and a two-part tariff pricing are equally beneficial in that the marginal benefit of the last unit sold equals the marginal cost of producing that unit. B) only perfect price discrimination because this pricing method eliminates deadweight loss C) only two-part tariff pricing because the per-unit portion of the price is set equal to marginal cost D) single-price monopoly pricing because consumers enjoy at least some consumer surplus
A) Both perfect price discrimination and a two-part tariff pricing are equally beneficial in that the marginal benefit of the last unit sold equals the marginal cost of producing that unit.
What is a factor market? A) It is a market where resources used to produce final goods are traded. B) It is a market where financial instruments are traded. C) It is a market where producers buy consumption and capital goods. D) It is a market where stocks and bonds are traded.
A) It is a market where resources used to produce final goods are traded.
What is a network externality? A) It refers to a situation in which a product's usefulness increases with the number of people using it. B) It refers to a product that requires connection to a network for it to be useful. C) It refers to lobbying to form a public enterprise. D) It refers to having a network of suppliers and buyers for a good or service.
A) It refers to a situation in which a product's usefulness increases with the number of people using it.
Refer to Scenario 17-1. Following the passage of comparable worth legislation, Unity College responds by placing salaries for all assistant professors at $80,000. Which of the following is the result of the legislation? A) There will be a surplus in the market for English professors and the market for business professors will not be affected. B) There will be a surplus in the market for English professors and a shortage in the market for business professors. C) The demand for English professors decreases; the market for business professors is not affected. D) The supply of English professors increases; the market for business professors is not affected.
A) There will be a surplus in the market for English professors and the market for business professors will not be affected.
Which of the following will prevent firms from engaging in price discrimination? A) arbitrage B) odd pricing C) yield management D) transactions costs
A) arbitrage
Marginal revenue product of labor for a competitive seller is A) equal to the marginal product of labor multiplied by the output price. B) the output price multiplied by the quantity sold. C) the marginal revenue of the product multiplied by the output price. D) the change in total product from hiring one more worker.
A) equal to the marginal product of labor multiplied by the output price.
A patent or copyright is a barrier to entry based on A) government action to protect a producer. B) ownership of a key necessary raw material. C) widespread network externalities. D) large economies of scale as output increases.
A) government action to protect a producer.
When a firm charges $4.95 instead of $5.00, what do economists call this pricing strategy? A) odd pricing B) indirect pricing C) unusual pricing D) cost-plus pricing
A) odd pricing
For which of the following firms is patent protection of vital importance? A) pharmaceutical firms B) furniture producers C) software firms D) auto makers
A) pharmaceutical firms
Governments grant patents to encourage A) research and development on new products. B) competition. C) low prices. D) firms to form public enterprises.
A) research and development on new products.
The antitrust law that prohibits price discrimination on grounds that it reduces competition is A) the Robinson-Patman Act. B) the Sherman Act. C) the Federal Trade Commission Act. D) the Clayton Act.
A) the Robinson-Patman Act.
Major League Baseball teams are similar to other firms in that they use factors of production to produce a product (baseball games). An example of capital used by teams to produce their products is A) the ballparks where the games are played. B) the land on which baseball games are played. C) the money teams earn from television contracts and ticket sales. D) the labor of baseball players.
A) the ballparks where the games are played.
The costs in time and other resources that parties incur in the process of agreeing to and carrying out an exchange of goods or services are called A) transactions costs. B) exchange costs. C) selling costs. D) implicit costs.
A) transactions costs.
Refer to Table 15-1. When producing the profit-maximizing output, what is the amount of the firm's profit? A) $335 B) $350 C) $880 D) $910
B) $350
What is the difference between a public franchise and a public enterprise? A) Both refer to a service provided directly to consumers through the government, but "public franchise" is a term more commonly used in the United States while "public enterprise" is more commonly used in European countries. B) A public franchise grants a firm the right to be the sole legal provider of a good or service. A public enterprise refers to a service that is provided directly to consumers through the government. C) A public enterprise grants a firm the right to be the sole legal provider of a good or service. A public franchise refers to a service that is provided directly to consumers through the government. D) A public enterprise is owned by the public through its holdings of shares of stock in the enterprise. A public franchise is a firm owned by the government.
B) A public franchise grants a firm the right to be the sole legal provider of a good or service. A public enterprise refers to a service that is provided directly to consumers through the government.
What is meant by the "law of one price"? A) Foreign companies should not be allowed to sell a product in the United States for prices different from prices these companies charge in other countries. B) Identical products should sell for the same price everywhere. C) This is a section of the Sherman Act that forced trusts (for example, the Standard Oil Company) to charge the same price for the same good or service in different states. D) A law was passed in 1913 that made it illegal to sell the same good or service to different people for different prices.
B) Identical products should sell for the same price everywhere.
Movie theaters often charge different people different prices for admission. Why don't theaters charge different prices for popcorn and other food items? A) Once people are in the theater, concession stands have monopoly power and can charge everyone the same high prices for food. B) It is difficult to limit the resale of food items from those who pay low prices to those who would have to pay high prices from the concession stand. C) Concession stand personnel are too busy to ensure that different people pay different prices for food items. D) Although the elasticity of demand for admission differs among customers, most people have the same the elasticity of demand for food items.
B) It is difficult to limit the resale of food items from those who pay low prices to those who would have to pay high prices from the concession stand.
How will an increase in population affect the labor market? A) It will increase the opportunity cost of leisure. B) It will shift the market supply curve. C) It will cause a decrease in the quantity of labor demanded. D) It will increase the supply of jobs.
B) It will shift the market supply curve.
Let MP = marginal product of labor, P = output price, and W = wage, then the equation that represents a situation where a competitive firm should lay off some workers to maximize profits is A) P × MP = W. B) P × MP < W. C) MP × W = P. D) P × MP > W.
B) P × MP < W.
Refer to Figure 15-2. To maximize profit, the firm will produce at output level A) Q1. B) Q2. C) Q3. D) Q4.
B) Q2.
Which of the following would cause an increase in the equilibrium wage? A) The supply of labor increases more than the demand for labor. B) The demand for labor increases faster than the supply of labor. C) The supply of jobs increases less than the demand for jobs. D) The supply of labor increases and the demand for labor decreases.
B) The demand for labor increases faster than the supply of labor.
Which of the following summarizes the impact of immigration growth on the labor market? A) There will be an increase in the demand for jobs. This will result in an increase in the equilibrium wage rate and a movement along the labor supply curve. B) This will increase the labor supply, reduce the equilibrium wage and increase the quantity of labor demanded. C) There will be an increase in both the demand for labor and the supply of labor. As a result, the equilibrium wage will not change. D) There will be an increase in the demand for labor. As a result, the wage rate will rise and the quantity of workers supplied will decrease.
B) This will increase the labor supply, reduce the equilibrium wage and increase the quantity of labor demanded.
Harry attended a baseball card show in New York City where he bought a number of rookie cards of Pittsburgh Pirates baseball players from the 1950s and 1960s. Harry then sold the cards in Pittsburgh, Harry's hometown, where he knew the cards sold for higher prices. The profits Harry earned from these transactions are called A) implicit profits. B) arbitrage profits. C) normal profits. D) accounting profits.
B) arbitrage profits.
To have a monopoly in an industry there must be A) an inelastic demand for the industry's product. B) barriers to entry so high that no other firms can enter the industry. C) a public franchise, making the monopoly the exclusive legal provider of a good or service. D) a patent or copyright giving the firm exclusive rights to sell a product for 20 years.
B) barriers to entry so high that no other firms can enter the industry.
Suppose you have worked at a local sandwich shop for six months and now you plan to ask your manager for a raise. How can you convince your manager that you are worth more money than you are currently being paid? A) by convincing him that you are a dedicated worker and ready to take on more responsibilities at the shop B) by showing your manager that your marginal revenue product has increased since your last wage increase C) by explaining to him how difficult it is for you to save enough money to go to college D) by threatening to quit if he refuses to give you a raise
B) by showing your manager that your marginal revenue product has increased since your last wage increase
Governments grant patents to A) encourage firms to reveal secret production techniques. B) compensate firms for research and development costs. C) encourage competition. D) encourage low prices.
B) compensate firms for research and development costs.
Which of the following products allows the seller to identify different groups of consumers (segment the market) at virtually no cost? A) a pair of Bose speakers B) early bird dinner specials C) iPhones D) books sold online
B) early bird dinner specials
A local electricity-generating company has a monopoly that is protected by an entry barrier that takes the form of A) network externalities. B) economies of scale. C) control of a key raw material. D) a perfectly inelastic demand curve.
B) economies of scale.
To be a natural monopoly, a firm must A) be in a government-regulated market. B) have economies of scale that are so large that it can supply the entire market at a lower cost than two or more firms. C) have significant network externalities. D) control a key resource input.
B) have economies of scale that are so large that it can supply the entire market at a lower cost than two or more firms.
A merger between the Ford Motor Company and General Motors would be an example of a A) vertical merger. B) horizontal merger. C) conglomerate merger. D) trust
B) horizontal merger.
According to the law of one price A) there must be no differences in the cost of producing identical goods by different producers. B) if transaction costs are zero, identical goods should sell for the same price everywhere. C) if transactions costs are zero, all firms must earn the same profit margin. D) if transactions costs are zero, firms must sell a product at a price equal to its marginal cost.
B) if transaction costs are zero, identical goods should sell for the same price everywhere.
The Aluminum Company of America (Alcoa) had a monopoly until the 1940s because A) the company had a secret technique for making aluminum from bauxite. B) it had control of almost all the available supply of bauxite. C) it was a public enterprise. D) it had a patent on the manufacture of aluminum.
B) it had control of almost all the available supply of bauxite.
Painters who paint water towers earn higher wages relative to painters who paint houses because A) the supply of water tower painters exceeds the supply of house painters. B) painting water towers is more risky than painting houses. C) the tower painters' union is probably more powerful than the house painters' union. D) the demand for tower painters is greater than the demand for residential painters.
B) painting water towers is more risky than painting houses.
If Mort's House of Flowers sells one dozen roses to different customers at different prices, economists would consider this an example of A) rational ignorance. B) price discrimination. C) price gouging. D) arbitrage.
B) price discrimination.
The law of one price A) is a law passed by Congress that prohibits firms from selling a product at two different prices in the same market at the same time. B) states that identical products should sell for the same price everywhere. C) states that consumers can only buy one good or service at a time. D) states that consumers will pay any price for a product that has a perfectly inelastic demand curve.
B) states that identical products should sell for the same price everywhere.
The demand for labor is different from the demand for final goods and services because A) the law of demand does not apply to the demand for labor. B) the demand for labor is derived from the demand for the good or service the labor is used to produce. C) the demand for labor is more inelastic than the demand for the goods and services produced with this labor. D) it is a demand for people, not inanimate objects.
B) the demand for labor is derived from the demand for the good or service the labor is used to produce.
A merger between U.S. Steel and General Motors would be an example of a A) horizontal merger. B) vertical merger. C) conglomerate merger. D) conspiracy in restraint of trade.
B) vertical merger.
Refer to Table 15-1. What is the marginal revenue from the sale of the 12th unit? A) $75 B) $50 C) $20 D) -$5
C) $20
Refer to Figure 17-1. If Dale can sell her doilies at $2 each, what is the marginal product of the 5th worker? A) $28 B) $56 C) 14 doilies D) 28 doilies
C) 14 doilies
The economists at the New York Fed estimate that the return the typical person receives from an investment in a college education is A) 4.5 percent per year. B) 12.5 percent per year. C) 15 percent per year. D) more than 40 percent per year.
C) 15 percent per year.
A United States government patent lasts A) forever. B) 50 years. C) 20 years. D) 7 years.
C) 20 years.
Refer to Table 17-1. The marginal product of the fourth unit of labor is A) 300. B) 75. C) 60. D) 15.
C) 60.
Let MP = marginal product of labor, P = output price, and W = wage, then the equation that represents the condition where a competitive firm would hire another worker is A) P × W > MP. B) P × MP = W. C) P × MP > W. D) P × MP < W.
C) P × MP > W.
Refer to Figure 15-2. The firm's profit-maximizing price is A) P1. B) P2. C) P3. D) P4.
C) P3.
Refer to Figure 17-1. Suppose the market price of doilies rises to $3. What happens to the curve given in the diagram? A) Nothing, because labor's productivity has not changed. B) There will be a movement along the curve. C) The curve shifts to the right. D) We cannot answer the question without knowing if Dale would want to hire more workers.
C) The curve shifts to the right.
An increase in the wage rate causes A) a rightward shift of the firm's labor demand curve. B) a leftward shift of the firm's labor demand curve. C) a decrease in the quantity of labor demanded. D) an increase in labor's marginal productivity.
C) a decrease in the quantity of labor demanded.
Until the early 1980s, The Walt Disney Company used a pricing strategy in which visitors to its theme parks paid a low admission fee and also paid for rides. This pricing strategy is an example of A) monopoly pricing. B) perfect price discrimination. C) a two-part tariff. D) cost-plus pricing.
C) a two-part tariff.
A decrease in the wage rate causes A) a rightward shift of the firm's labor demand curve. B) a decrease in labor's productivity. C) an increase in the quantity of labor demanded. D) a leftward shift of the firm's labor demand curve.
C) an increase in the quantity of labor demanded.
In the United States, government policies with respect to monopolies and collusion are embodied in A) the Supreme Court. B) common law, which the United States adopted from English law. C) antitrust laws. D) the U.S. Constitution.
C) antitrust laws.
The equilibrium wage and quantity of labor in the market for skilled workers is determined by A) the monopsony power of firms. B) the strength of labor unions. C) the demand and supply of labor. D) the market value created by the output of these skilled workers.
C) the demand and supply of labor.
Which of the following explains why talented major league baseball players command much higher salaries than neurosurgeons? A) because the total value of baseball games is much higher than the total value of neurosurgery B) because it takes far more skill and training to be a major league baseball player than to be a neurosurgeon C) because the supply of talented major league baseball players is low relative to its demand compared to the supply of neurosurgeons. Therefore, adding another player yields far greater marginal benefit than adding another neurosurgeon. D) because the supply of talented major league baseball players is relatively low compared to the supply of neurosurgeons. Therefore, major league baseball players exert far more market power than neurosurgeons.
C) because the supply of talented major league baseball players is low relative to its demand compared to the supply of neurosurgeons. Therefore, adding another player yields far greater marginal benefit than adding another neurosurgeon.
The collection and analysis of massive amounts of data, with the goal of measuring aspects of people's behavior is referred to as A) marginal utility. B) the Internet of Things. C) big data. D) mega processing.
C) big data.
One reason why airlines charge business travelers and leisure travelers different prices is A) business travelers fly more often than most leisure travelers. As a result, their employers are able to bargain with airlines for lower fares than leisure travelers pay. B) business travelers fly according to schedules that are planned months in advance. Many leisure travelers buy their tickets at the last minute. C) business travelers often have inflexible schedules and have to travel on a particular day. The opposite is true for leisure travelers. D) business travelers usually travel alone. Leisure travelers often fly with friends and family members; therefore, they have a more inelastic demand for airline tickets than business travelers.
C) business travelers often have inflexible schedules and have to travel on a particular day. The opposite is true for leisure travelers.
Arbitrage refers to the act of A) trading in the foreign exchange market. B) resolving a dispute in front of an arbitrator instead of a court of law. C) buying a product in one market at a low price and reselling in another market at a higher price. D) suing a producer for illegal business practices.
C) buying a product in one market at a low price and reselling in another market at a higher price.
The price of admission to Walt Disney World A) is the same for everyone. B) is kept low to attract customers, but prices of food and souvenirs inside the park vary by your age, address and other factors. C) can vary by your age and address. D) is determined by the weather on the day of admission.
C) can vary by your age and address.
Perfect price discrimination is also known as A) monopoly. B) third-degree price discrimination. C) first-degree price discrimination. D) yield management.
C) first-degree price discrimination.
The most profitable price for a monopolist is A) the highest price a consumer is willing to pay for the monopolist's product. B) the price at which demand is unit elastic. C) found where the profit-maximizing quantity hits the demand curve. D) a price that maximizes the quantity sold.
C) found where the profit-maximizing quantity hits the demand curve.
The United States Post Office A) is an example of a monopoly that results from the ownership of a key resource: first class mail service. B) can safely ignore the prices for mail services charged by its rivals such as FedEx and UPS. C) has a monopoly in the provision of first-class mail service. D) faces no competition for its mail services.
C) has a monopoly in the provision of first-class mail service.
Refer to Table 17-2. The firm represented in the diagram A) has market power in the factor market. B) has no market power in the factor or product market. C) has market power in the output market. D) has market power in both the factor and product market.
C) has market power in the output market.
Arbitrage A) is any act of buying and selling that results in the seller earning an above normal profit. B) is the act of buying an item at a low price, bundling it with another and selling the new package at a much higher price. C) is the act of buying an item at a low price and reselling the item at a higher price. D) is the act of selling an item on consignment and collecting a huge portion of the proceeds to compensate for the seller's time.
C) is the act of buying an item at a low price and reselling the item at a higher price.
If the number of employees who quit, are fired, or retire increases while the hiring of new employees declines, this indicates that the A) labor demand curve is shifting to the right. B) labor supply curve is shifting to the right. C) labor demand curve is shifting to the left. D) labor supply curve and labor demand curve are both shifting to the right.
C) labor demand curve is shifting to the left.
The ability of a firm to charge a price greater than marginal cost is called A) cost-plus pricing. B) price-making power. C) market power. D) monopoly power.
C) market power.
Today, Walt Disney World charges different customers different prices for admission, even though the differences in prices is not due to differences in costs. This pricing strategy is called A) odd pricing. B) cost-price pricing. C) price discrimination. D) arbitrage.
C) price discrimination.
Rio Tinto was able to introduce robotic machines into its mining operations because of developments in computer technology, the Global Positioning System (GPS), and robotics. The company's mining operations are an example of ________, in which devices directly communicate data to a computer without a person having to enter the data. A) Artificial Intelligence B) Technological Singularity C) the Internet of Things D) the use of Big Data
C) the Internet of Things
The network of devices directly communicating data to a computer without a person having to enter the data is known as A) Big Data. B) Synergistic Communications. C) the Internet of Things. D) Artificial Intelligence.
C) the Internet of Things.
Transactions costs refer to A) the raw material cost of production. B) the cost of transporting goods from one destination to another. C) the costs in time and other resources that parties incur in the process of agreeing to and carrying out an exchange of goods or services. D) the implicit costs of production.
C) the costs in time and other resources that parties incur in the process of agreeing to and carrying out an exchange of goods or services.
According to the law of one price, identical products should sell for the same price everywhere if A) firms can prevent consumers from engaging in arbitrage. B) there are no tariffs or other restrictions on imports or exports. C) transactions costs are zero. D) consumers have knowledge of the prices charged for products in different markets.
C) transactions costs are zero.
Yield management is the practice of A) forecasting competitors' responses to price changes. B) determining production functions to minimize production costs. C) using buyer data to rapidly adjust prices. D) using information technology to find the best interest rate.
C) using buyer data to rapidly adjust prices.
A monopoly is the only seller of a product A) without a well-defined demand curve. B) with a perfectly inelastic demand. C) without a close substitute. D) with many substitutes.
C) without a close substitute.
The process of rapidly adjusting prices based on information gathered on consumers' preferences and their responsiveness to changes in price is called A) elasticity management. B) brand management. C) yield management. D) marketing.
C) yield management.
Refer to Figure 17-1. If the wage rate is $40, how many workers should Dale hire? A) 6 B) 5 C) 4 D) 3
D) 3
Which of the following is true for a monopolist? A) Being the only seller in the market, the monopolist faces a downward-sloping demand curve that lies below the marginal revenue curve. B) Being the only seller in the market, the monopolist faces a perfectly inelastic demand curve. C) Being the only seller in the market, the monopolist faces a perfectly elastic demand curve. D) Being the only seller in the market, the monopolist faces the market demand curve.
D) Being the only seller in the market, the monopolist faces the market demand curve.
Refer to Table 15-1. What is the firm's profit-maximizing output and what is the price charged to sell this output? A) P = $80; Q = 11 B) P = $85; Q = 10 C) P = $65; Q = 14 D) P = $70; Q = 13
D) P = $70; Q = 13
Daniel Hamermesh and Stephen Donald studied the determinants of the earnings of college graduates years after they graduated. Which of the following is one result of their study? A) Students who took at least three economics courses earned about 9 percent more income than students who took no college economics courses. B) Students who took more Advanced Placement (AP) courses while still in high school earned significantly more income for each AP course they passed with a grade of 4 or 5. C) The earnings of identical twins were about 9 percent higher than the earnings of all other students. D) Students who had taken 15 credits of upper-division science and mathematics courses and earned high grades in these courses earned about 10 percent more than students who took no upper-division classes in these subjects.
D) Students who had taken 15 credits of upper-division science and mathematics courses and earned high grades in these courses earned about 10 percent more than students who took no upper-division classes in these subjects.
Which one of the following is not a possible barrier to entry high enough to keep competing firms out of a monopoly industry? A) large economies of scale that result in a natural monopoly B) There are important network externalities in supplying a good or service. C) The monopoly firm has control of a key resource necessary to produce a good. D) a high concentration ratio
D) a high concentration ratio
When firms use big data to determine how responsive different groups of customers are to changes in prices, the firms are engaging in price discrimination. This pricing strategy is also called all of the following except A) price optimization. B) dynamic pricing. C) yield management. D) arbitrage pricing.
D) arbitrage pricing.
When you buy at a low price in one market then sell at a higher price in another market you are engaging in A) price discrimination. B) odd pricing. C) an antitrust prohibited practice. D) arbitrage.
D) arbitrage.
When firms price their products by adding a percentage markup to their average costs of production, this is called A) rounding up. B) average cost pricing. C) break-even pricing. D) cost-plus pricing.
D) cost-plus pricing.
Consumers who will pay high prices to be among the first to own certain new products are called A) gullible. B) savvy consumers. C) naive consumers. D) early adopters.
D) early adopters.
Compensating differentials are A) non-monetary benefits from being employed, such as health-care benefits. B) wages paid to workers where the supply of labor is great relative to demand. C) higher wages that compensate the more experienced workers in a field. D) higher wages that compensate workers for unpleasant aspects of a job.
D) higher wages that compensate workers for unpleasant aspects of a job.
If the labor supply is unchanged, an increase in the demand for labor will A) increase the equilibrium wage and decrease the number of workers employed. B) decrease the equilibrium wage and increase the number of workers employed. C) increase the equilibrium wage and increase the quantity of jobs demanded. D) increase the equilibrium wage and increase the number of workers employed.
D) increase the equilibrium wage and increase the number of workers employed.
Price discrimination A) is the practice of giving preferential treatment to certain groups of customers based on their long-standing relationship to the producer. B) is the practice of charging different prices to different customers based on the different costs of supplying the product to different customers. C) is the practice of charging different prices to different customers based on a seller's personal preferences and prejudices. D) is the practice of charging different prices to different customers when the price differences cannot be attributed to variations in cost.
D) is the practice of charging different prices to different customers when the price differences cannot be attributed to variations in cost.
In the real world, A) all sellers charge one price equal to the marginal cost of production. B) all sellers charge one price set by the government. C) profitable sellers will set one price based on the average elasticity of demand of buyers. D) many firms charge different prices based on consumers' willingness to pay.
D) many firms charge different prices based on consumers' willingness to pay.
A firm's demand for labor curve is also called its A) marginal benefit of labor curve. B) marginal valuation curve. C) marginal factor cost of labor curve. D) marginal revenue product of labor curve.
D) marginal revenue product of labor curve.
All else equal, if job turnover has people leaving jobs and finding new jobs in the same industry, this will A) decrease the supply of labor, but not change the demand for labor. B) increase the demand for labor and the supply of labor. C) increase the demand for labor and decrease the supply of labor. D) not change demand or supply in the labor market.
D) not change demand or supply in the labor market.
Economic discrimination takes place when an employer A) pays workers the lowest wage possible. B) pays workers compensating wage differentials. C) pays lower wages to workers who are not as productive as other workers. D) pays workers different wages on the basis of some arbitrary characteristics of workers that are irrelevant to the job performed.
D) pays workers different wages on the basis of some arbitrary characteristics of workers that are irrelevant to the job performed.
Rio Tinto's incentive to adopt new robotic technology was increased by the high wages it was having to pay to attract miners and truck drivers. In this instance, Rio Tinto began using new robotic technology to A) add capital as a complementary resource for its labor. B) add labor as a complementary resource for its capital. C) substitute labor for capital in production. D) substitute capital for labor in production.
D) substitute capital for labor in production.
A Herfindahl-Hirschman Index is calculated by A) dividing the advertising expenditures of the firms that want to merge by total industry advertising expenditures. B) summing the amount of sales by the four largest firms and dividing by total industry sales. C) dividing the number of firms wanting to merge by the total number in the industry. D) summing the squares of the market shares of each firm in the industry.
D) summing the squares of the market shares of each firm in the industry.
The law of one price states A) government regulation of prices for all firms. B) federal and state statutes that prohibit price discrimination. C) that all customers should pay the same price. D) that identical products should sell for the same price everywhere.
D) that identical products should sell for the same price everywhere.
In a natural monopoly, throughout the range of market demand, A) the marginal cost is above average total cost and pulls average total cost upward. B) average total cost is above the marginal cost and pulls the marginal cost upward. C) there are diseconomies of scale. D) the marginal cost is below average total cost and pulls average total cost downward.
D) the marginal cost is below average total cost and pulls average total cost downward.
Wage differentials between occupations can be explained by all of the following except A) the relative differences between demand and supply in various occupations B) the fact that some occupations are more desirable than others. C) the fact that some occupations require higher levels of human capital than others. D) the market power of different employers.
D) the market power of different employers.
Harvey Morris bought dishes and pitchers made of blue glass during the Great Depression at a flea market. He later resold these items on eBay. The profits Harvey earned from these sales are A) accounting profits but not economic profits. B) subject to a retail profits tax. C) not economic profits because Harvey did not add value to the items but took advantage of the buyers who were not aware of how much Harvey paid for the items. D) the result of arbitrage.
D) the result of arbitrage.
If Molly Bee increases her work hours when her wage increases, then A) Molly is spending beyond her means. B) the income effect of the wage increase outweighs the substitution effect. C) leisure is an inferior good to Molly. D) the substitution effect of the wage increase outweighs the income effect.
D) the substitution effect of the wage increase outweighs the income effect.
The expenses you encounter when you buy in one market and sell in a distant market are known as A) sunk costs. B) production costs. C) fixed costs. D) transactions costs.
D) transactions costs.
Many firms use technology to gather information on the preferences of consumers and their responses to changes in prices. This information is then used to adjust prices of the firms' goods and services. This practice is called A) econometrics. B) price discovery. C) empirical research. D) yield management.
D) yield management.
Which of the following will not shift the demand curve for labor? an increase in the price of the product that labor is helping to produce the adoption of a more efficient method of combining labor and capital in the production process a change in the wage rate the use of a larger stock of capital with the labor force
a change in the wage rate
Which of the following statements best illustrates the concept of derived demand? a decline in the demand for shoes will cause the demand for leather to decline as income goes up, the demand for farm products will increase by a smaller relative amount a decline in the price of margarine will reduce the demand for butter when the price of gasoline goes up, the demand for motor oil will decline
a decline in the demand for shoes will cause the demand for leather to decline
Pure monopoly refers to a standardized product being produced by many firms. a large number of firms producing differentiated product. any market in which the demand curve for the firm is downsloping. a single firm producing a product for which there are no close substitutes.
a single firm producing a product for which there are no close substitutes.
Other things equal, in which of the following cases would economic profit be the greatest? a regulated monopolist charging a price equal to average total cost. an unregulated, non-discriminating monopolist. a regulated monopolist charging a price equal to marginal cost. an unregulated monopolist that is able to engage in price discrimination.
an unregulated monopolist that is able to engage in price discrimination.
Increases in the productivity of labor result partly from improvements in technology reductions in wage rates the law of diminishing returns increases in the quantity of labor
improvements in technology
Economic rent, or pure rent, is the price paid for the use of land and other nonreproducible goods a payment made for the use of housing, factory buildings, or capital goods a payment for the use of those resources whose supply is perfectly elastic a payment for resources used in the production of "free goods"
the price paid for the use of land and other nonreproducible goods
In monopsony, the employer is a "wage taker" each firm employs a small portion of the total supply of labor the wage rate paid by the employer varies directly with the number of workers employed the workforce is highly mobile
the wage rate paid by the employer varies directly with the number of workers employed
With creation and growth of the internet,vacationers can now book their own flights, hotels, rental cars, and other travel logistics online. If this capability resulted in creative destruction, which if the following industries would have expected to decline the most as a result? airlines tourist information hotels travel agencies
travel agencies
