Microeconomics Exam 3 Chang Mississippi State

D. The drugs would not have been developed.

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? A. Larger quantities of the drugs would have been produced. B. The drug prices would have been even higher. C. The drug prices would have been lower from the start. D. The drugs would not have been developed.

4; 3

How many workers would the firm hire if it were required to pay a wage of $14/h? If the Federal minimum wage were suddenly increased to $20/h, how many workers would the firm then employ?

A. the product cannot be resold.

Price discrimination can be successful only if A. the product cannot be resold. B. the company lacks market power. C. the market is highly competitive. D. there are many sellers.

B. a payoff table

What is this kind of table called? A. an outcome matrix B. a payoff table C. a game matrix D. an interaction table

C. Graph A

Which graph shows the scenario where the substitution effect dominates labor supply decisions? A. Graph C B. Graph D C. Graph A D. Graph B

A. $4; $4

If Jose charges $8, Maria should charge _____. If Jose charges $4, Maria should charge _____. A. $4; $4 B. $4; $8 C. $8; $4 D. $8; $8

the substitution effect; the income effect the income effect; the substitution effect

In Graph 1, __________ dominates _____________. In Graph 2, _________ dominates _____________.

D. wage; hours of labor

In a labor market graph, _____ is measured on the vertical axis, and _____ is measured on the horizontal axis. A. hours of labor; wage B. product price; number of workers C. number of workers; product price D. wage; hours of labor

D. marginal revenue product.

The marginal revenue from hiring an additional worker is known as A. marginal worker revenue. B. labor marginal product. C. labor marginal revenue. D. marginal revenue product.

C. punish rivals who do not cooperate.

A Grim Trigger strategy is to: A. aggressively announce actions in advance. B. take extreme actions whenever profits fall. C. punish rivals who do not cooperate. D. defect on all agreements.

A. 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 Nash equilibrium can be identified on a payoff table when: A. a check mark is put next to each player's best response, and there is a cell with a check mark for each player. B. one cell contains the highest gain for each player, although it may not be the player's best response. C. a check mark is put next to each player's best response, and there is a cell with no check marks in it. D. each player has an equilibrium that is opposite that of the other player, so they are not in conflict.

A. nonrival

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. A. nonrival B. nonexcludable C. free D. shareable

A. a monopolistically competitive market.

A market with many small sellers and a high level of product differentiation is known as A. a monopolistically competitive market. B. an oligopoly. C. a perfectly competitive market. D. a monopoly.

A. reducing; the price is above its marginal cost

A price-discriminating company can attract more customers by _____ price, as long as _____. A. reducing; the price is above its marginal cost B. raising; new customers are convinced to pay the price C. raising; the price is above marginal benefit and below marginal cost

D. higher the buyers' reservation price will be.

A useful rule of thumb is that the higher the marginal benefit a consumer gains from a product, the A. lower the consumer's demand for the product will be. B. more the consumer will seek substitutes for the product. C. more price-sensitive the consumer will be. D. higher the buyers' reservation price will be.

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

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. A. Yes, it was a good move because the ticket sales rose more than price. B. Yes, it was a good move because it added more to revenue than to cost. C. No, it was a bad move because it added more to cost than revenue. D. No, it was a bad move because price did not rise as much as ticket sales.

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

An externality is defined as: A. an effect of market activity that impacts the opposite side of the market from the side whose decision caused the effect. B. the effect of an activity undertaken outside a building rather than inside a building. C. a side-effect of an activity that affects bystanders whose interests are not taken into account. D. the impact of an activity on buyers and sellers in the market where the activity takes place.

D. the marginal social benefit exceeds the marginal social cost.

The Rational Rule for Society is that society should produce another unit of a good if: A. the total social benefit exceeds the total social cost. B. gains to the producer exceed losses to the producer. C. the marginal private benefit exceeds the marginal private cost. D. the marginal social benefit exceeds the marginal social cost.

A. 8

The graph shows the marginal social cost, supply, and demand curves in the hand sanitizer market. At what quantity could the government set a quota to control this externality? A. 8 B. 2 C. 4 D. 12

B. socially optimal

The outcome that is most efficient for society as a whole — including the interests of buyers, sellers, and bystanders — is the _____ outcome. A. externally optimal B. socially optimal C. social benefit maximizing D. public optimal

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

To avoid harm to society, the government often becomes the supplier of a good or service when the respective market A. has been engaging in illegal activities that the government seeks to eliminate. B. has high profit, and the government can use those to replace tax revenue. C. would be a natural monopoly, and the good or service is considered essential. D. would be competitive enough to cause surpluses to develop.

A. Agreements between sellers to increase their market power

What is collusion? A. Agreements between sellers to increase their market power B. A merger of two sellers C. Regulatory restrictions on the entry of new sellers into an industry D. Cooperation between sellers to increase the level of competition

C. they would not be able to hire anyone.

In a perfectly competitive labor market, employers will not pay less than the market wage because at a wage below the equilibrium A. there would be a surplus of workers. B. they would be inundated with excess workers. C. they would not be able to hire anyone. D. the equilibrium wage would rise.

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

The marginal private benefit is the: A. extra benefit that goes to bystanders for each additional unit of a good consumed by others. B. addition to the satisfaction a buyer receives from the total quantity of a product consumed. C. total extra benefit society gains from the consumption of an extra unit of a good. D. extra benefit enjoyed by the buyer of one extra unit of a good or service.

B. the hurdle method; reservation price

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 _____. A. the hurdle method; marginal cost B. the hurdle method; reservation price C. impediment pricing; marginal benefit D. segment blocking; marginal benefit

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

When players in a game collude, they: A. act independently to try to eliminate other players from the game. B. choose to avoid any outcomes that harm their rival. C. change their products, so that they are in different markets and not competing with each other. D. make agreements not to compete with each other and, typically, to charge high prices.

A. "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. Statistical discrimination occurs when employers discriminate against job candidates based on an irrelevant but observable characteristic which correlates to an unmeasurable but relevant characteristic.

Which of the following are true of statistical discrimination? There may be more than one correct answer. A. "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. Statistical discrimination occurs when employers discriminate against job candidates based on an irrelevant but observable characteristic which correlates to an unmeasurable but relevant characteristic. C. Statistical discrimination occurs when firms base hiring decisions on which candidate will improve the firm's diversity statistics. D. Some employers run complex statistical analysis of candidates' resumes before deciding who to interview for a position.

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

Which of the following statements regarding a Nash equilibrium is TRUE? A. All players choose their overall best response without regard to the other player's likely choice. B. No player can do better by unilaterally changing his or her choice. C. Each player's expectation of the other player's choice is often incorrect. D. Cooperation between players could not improve the outcome.

B. $4,000; $3,500

With no cooperation, the Nash equilibrium yields Bella a profit of _____ and Martin a profit of _____. A. $1,000; $5,500 B. $4,000; $3,500 C. $5,000; $5,000 D. $6,000; $1,000

B. quantity discount.

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 A. group pricing. B. quantity discount. C. fluctuating prices. D. bad service.

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

Externalities tend to occur because decision makers consider _____ and do NOT consider _____. A. their own income as limitless; their income as limited B. their own costs and benefits; the effects of their actions on others C. their own needs as most important; the fact that others also have needs D. the welfare of others; their own welfare

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

Game theory is: A. a view on the development of children's games and toys. B. a view on decision making when clear paths to optimum outcomes are known. C. the analysis of market forces when there is role reversal for buyers and sellers. D. the science of making good decisions in situations involving strategic interactions.

C. They are price-sensitive.

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? A. Their demand for pizza is highly inelastic. B. Their marginal benefit from pizza is very high. C. They are price-sensitive. D. They have a high reservation price for pizza.

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

Marta owns a food truck. Which of the following would limit Marta's ability to price discriminate? A. Marta has little understanding of how much each customer values her product. B. Marta has considerable market power because she is the only seller in town of of that kind of food. C. Marta's product is good only if it is consumed immediately, making it difficult to store for resale.

A. a more efficient output

Price discrimination leads to _____ than a one-price system. A. a more efficient output B. fewer buyers C. a lower average cost D. a lower average price

D. reservation price

Selling alternative versions of a product at different prices is a way to identify the _____ of customers and charge them different prices. A. size of the population B. observable differences C. marginal cost D. reservation price

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

The Rational Rule for Employers implies that they keep hiring until A. the wage equals marginal product. B. revenue equals cost. C. the wage equals the marginal revenue product of the last worker hired. D. marginal product equals marginal revenue.

D. $3,000; $3,000

Use the check mark method to determine which cell contains a Nash equilibrium. Under a Nash equilibrium, Hui Er earns profits of _____, and Tasha earns profits of _____. A. $5,000; $5,000 B. $6,000; $700 C. $700; $6,000 D. $3,000; $3,000

D. 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. a monopoly. B. a perfectly competitive market. C. an oligopoly. D. a monopolistically competitive market.

D. not a price-taker

When a company has market power, it is _____ in its market. A. a producer of nondifferentiated products B. not able to impact the market equilibrium price C. one of many small companies D. not a price-taker

C. Assume that others will defer to your action.

Which of the following is NOT one of the four steps for making good strategic decisions? A. Think about the "what ifs" separately. B. Consider all the possible outcomes. C. Assume that others will defer to your action. D. Play your best response.

B. 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.

Any outcome that can be achieved by taxing can also be accomplished by establishing a quota. This is because A. if we know the marginal social cost, we can set the optimal quantity equal to the optimal price. If we know the optimal quantity, we can set a quota equal to the optimal price. B. 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. C. If we know the optimal quantity, we can set a quota and the market will find the optimal price.if we know the optimal quantity, cap and trade can be used to set the price. If we know the marginal social cost, a tax can be used to set the quantity. D. knowing the marginal social cost allows companies to know how much to increase their prices and make more profits. This is better for the economy as a whole because then companies can create more jobs. Cap and trade restricts quantity, which lowers profits.

B. $7; $6,000

Devin tries to put himself in Gizelle's place. He concludes that if he (Devin) charges $8, then Gizelle will charge _____ to earn a profit of _____. A. $6; $3,000 B. $7; $6,000 C. $8; $4,000 D. $9; $5,000

C. There is only one seller.

Which of the following is a characteristic of monopoly that is not present in other market structures? A. There are many buyers. B. The product is identical across all sellers. C. There is only one seller. D. Sellers are price-takers.

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

Which of the following is an example of a company practicing price discrimination? A. The average price of a haircut is $20 in Dayton and $30 in Cincinnati. B. Johann's bakery charges $2 for a cookie, and Bella's bakery charges $3 for an identical cookie. C. A restaurant charges different prices for fountain drinks based on their size. D. Most passengers traveling on an airplane pay different prices for their tickets.

B. a siren tornado warning system

Which of the following would be both nonrival and nonexcludable? A. an immunization B. a siren tornado warning system C. a museum D. a road

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

A basic logic that applies to all strategic interactions is: A. making a good choice requires that you anticipate what others will do. B. risk must be eliminated. C. action should not be taken until there is a clear best choice. D. games should be avoided, so that decisions can be based on facts.

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

A good has a free-rider problem when: A. someone can enjoy the benefits of the good without bearing the costs. B. any seller provides it for free as a special promotion. C. it can be transported at no cost to the consumer, with sellers bearing all transportation costs. D. it has no negative externalities but only positive externalities.

D. overproduce

By contrast with a market that produces the socially optimal output, a market with negative externalities will: A. produce the correct output. B. underproduce. C. produce no output. D. overproduce.

B. Oligopoly

In which market structure do the actions of a rival have a significant impact on your operations? A. Monopoly B. Oligopoly C. Perfect competition D. Monopolistic competition