Microeconomics Final Exam Review JJ Lickiss

When resources are shared or owned in common, the Nash equilibrium leads to:

Overuse of resources

On a graph of a company's cost, revenue, and demand curve, the company's profit margin can be identified as the gap between___ and ___ for a given quantity.

Price; average cost

Which of the following would shift the labor supply curve?

The government increases its provision of childcare services

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

There is only one seller

When a seller uses group pricing, members of the same group pay

the same price for the product

When an employer exerts monopsony power?

wages will be lower

The Prisoner's Dilemma shows how markets:

Can deliver bad outcomes

Which of the following is NOT a characteristic of perfectly competitive markets?

Each seller sets its own price

Marcella is deciding whether to start a bakery in her hometown. She should start if she expects that:

Her average revenue will exceed her average cost

Inez owns a technology company. Which of the following conditions would make it difficult for her to price discriminate?

Her market is highly competitive

Pak has divided his customers into two groups so that he can charge a higher price to one group than the other. Which of the following should be TRUE about the group that pays a higher price?

This group gains a higher marginal benefit from the product than the group paying a lower price

Hendra has divided her customers into two groups so that she can charge a higher price to one group than the other. Which of the following is TRUE about the group paying the lower price?

This group has a lower reservation price than the group paying the higher price

When there is free entry and exit of sellers in an industry, in the long run, sellers will have:

zero economic profits

John is thinking of opening a florist shop. He forecasts revenues of $200,000 per year and explicit financial costs of $140,000 per year. He can pursue this opportunity only if he quits his current job as a driver, where he earns $45,000 per year. He would also need to invest $110,000 of his savings to set up the shop-funds on which he would otherwise be earning a 6% return. Based on this information, how much economic profit or loss would John earn in his first year in business?

A profit of $8,400

Which of the following is NOT part of the rationale for efficiency wages?

An efficiency wage rewards worker productivity with higher pay