micro homework questions

Marta owns a food truck. Which of the following would limit Marta's ability to price discriminate?

Marta has little understanding of how much each customer values her product.

Patents on drugs to treat AIDS were removed in South Africa. How would the market for these drugs have been different if there had never been patents on drugs?

The drugs would not have been developed.

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

There is only one seller.

Hassan is a student who received a coupon to buy pizza from Pizza House at $4 off the regular price. Students at Hassan's school seem to receive the coupons frequently. Which of the following is an assumption that the owners of Pizza House are making about students at Hassan's school?

They are price-sensitive.

A Nash equilibrium can be identified on a payoff table when:

a check mark is put next to each player's best response, and there is a cell with a check mark for each player.

A market with many small sellers and a high level of product differentiation is known as

a monopolistically competitive market.

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

a monopolistically competitive market.

Price discrimination leads to _____ than a one-price system.

a more efficient output

An externality is defined as:

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

Which of the following would be both nonrival and nonexcludable?

a siren tornado warning system

The marginal private benefit is the:

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

A useful rule of thumb is that the higher the marginal benefit a consumer gains from a product, the

higher the buyers' reservation price will be.

The Nobel Prize‑winning economist Oliver Hart once said, "If we know the marginal social cost [of pollution] emissions, a tax is better, but if we know the optimal quantity, cap and trade is better." Given this statement and the knowledge of ways governments can intervene in markets, evaluate the following statement: Any outcome that can be achieved by taxing can also be accomplished by establishing a quota. This is because

if we know the marginal social cost, we can set the tax so that price is equal to the optimal price. As a result, the optimal quantity will be achieved. If we know the optimal quantity, we can set a quota and the market will find the optimal price.

When players in a game collude, they:

make agreements not to compete with each other and, typically, to charge high prices.

A basic logic that applies to all strategic interactions is:

making a good choice requires that you anticipate what others will do.

The marginal revenue from hiring an additional worker is known as

marginal revenue product.

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

nonrival

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

not a price-taker

A Grim Trigger strategy is to:

punish rivals who do not cooperate.

Bayside Shoe Shop offers a BOGO (buy one, get one) special where customers can buy one pair at full price and get another pair at half-price. This form of price discrimination is referred to as

quantity discount.

A price-discriminating company can attract more customers by _____ price, as long as _____.

reducing; the price is above its marginal cost

Selling alternative versions of a product at different prices is a way to identify the _____ of customers and charge them different prices.

reservation price

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

socially optimal

A good has a free-rider problem when:

someone can enjoy the benefits of the good without bearing the costs.

When a seller offers lower prices to those buyers who are willing to overcome some obstacle to get it, the seller is using _____ to get buyers to reveal their _____.

the hurdle method; reservation price

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

the marginal social benefit exceeds the marginal social cost.

Price discrimination can be successful only if

the product cannot be resold.

Game theory is:

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

The Rational Rule for Employers implies that they keep hiring until

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

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

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

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

they would not be able to hire anyone.

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

wage; hours of labor

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

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

What is collusion?

Agreements between sellers to increase their market power

Which of the following is NOT one of the four steps for making good strategic decisions?

Assume that others will defer to your action.

Which of the following are true of statistical discrimination? There may be more than one correct answer. Statistical discrimination occurs when firms base hiring decisions on which candidate will improve the firm's diversity statistics. Statistical discrimination occurs when employers discriminate against job candidates based on an irrelevant but observable characteristic which correlates to an unmeasurable but relevant characteristic. Some employers run complex statistical analysis of candidates' resumes before deciding who to interview for a position. "Ban the box" laws not allowing employers to ask potential employees whether or not they have been in jail is increasing discrimination against Black men, particularly those without a college degree.

B and D

Which of the following is an example of a company practicing price discrimination?

Most passengers traveling on an airplane pay different prices for their tickets.

Which of the following statements regarding a Nash equilibrium is TRUE?

No player can do better by unilaterally changing his or her choice.

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

Oligopoly

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

Overproduce

Alena manages a small theme park. She hires one more custodian at $450 per week, and her park is cleaner and more attractive. As a result of this improvement, ticket sales rise by 40 tickets per week. Tickets sell for $12. Use the Rational Rule for Employers to determine if hiring the extra custodian was a good move.

Yes, it was a good move because it added more to revenue than to cost.