test bank
the graph shows the marginal social costs, demand, and supply curves in the cinnamon roll market. A corrective tax pf ___ per unit will move the cinnamon roll market to the socially optimal output of ___ units
$4, 4
your company sells 19 units at a price of $10 and must change price to $9.90 in order to sell 20 units. What is the marginal revenue of the twentieth unit?
$8, you must units*price and then subtract the revenue differences
what is the marginal revenue product of the second worker ?
800
When price discrimination is practiced, a company sells ___ and charges ____ compared to what it would do without practicing price discrimination
A large output, a greater range of prices
What attracts new sellers into a market?
Existing sellers in the market earning economic profits
Assume that there is free entry and exit in the management consulting market. How profitable can Mario except his new consulting business to be in the long run?
It will experience zero economic profits
the marginal revenue product of labor is equal to:
MPL * P
In which if the following situations would Max Doughnut Shop have the greatest market power?
The closest doughnut shop or bakery is 25 miles away from Max shop
What is the relationship between a company market power and the price that the price that the company's owner can charge for its product
The greater the market power, the higher the price the firm can charge without losing many customers
when sellers exit a market in which the average seller has losses, the remaining sellers will each experience
a rising price, higher sales, and increased market power
what is collusion?
agreements between sellers to limit competition, and the most common way of colluding is price fixing
a higher wage paid to encourage greater worker productivity is:
an efficiency wage
we discussed two research papers about statistical discrimination. What are these papers?
ban the box (BTB); pink work (same-sex marriage legalization)
after Giselle increased worker training at her company, the output per worker rose by 5%. What impact would this have on labors marginal revenue product and her demand for labor?
both marginal revenue product and demand for labor would increase
when a seller has a high level of market power, the seller
can raise its price without losing many customers
the marginal private benefit curve is also the
demand curve
candices stand up paddle board company will ear profits producing and selling at any output level where the companys:
demand curve is above its average cost curve
the formula for calculating accounting proft is total revenue- ____ costs
explicit financial
the marginal private benefit is the
extra benefit enjoyed b y the buyer of one extra unit of a good or service
the marginal product of labor is the
extra production that occurs from hiring an extra worker
marginal revenue product is the
extra revenue produced by hiring an additional worker
when a good is non-rival and non-excludable, it suffers from the _____ problems
free-rider
which graph shows the scenario where the substitution effect dominates labor supply decision?
graph A
which of the following is NOT true about imperfect competition?
greater product differentiation decreases market power
when setting prices for different groups of customers, a manager should charge lower prices to groups that
have a more elastic demand
compensating differentials lead to :
higher salaries for more unpleasant jobs.
when the wages for public school teachers rises by 15% in a state, the number of people seeking jobs as teachers
increases
game theory is helpful in analyzing situations in which there is _____ the decisions makers.
interdependence between
why are cooperative agreements rare in markets with strategic interactions?
it is too hard to predict what other players will do
the supply curve of a firm is also its _____ cost curve
marginal private
the change in total revenue from selling one additional unit of output is the
marginal revenue
an employers labor demand curve is equal to the
marginal revenue product curve
the most common market structure are
monopolistic competition and oligopoly
when firms in a market with free entry and exit have economic profits, then:
new companies will enter the market, reducing average company profits
to accumulate human capital, you can
obtain it through education, training, and experience
if Larry uses the rational rule for employers, how many workers will he hire?
one
when a market transaction has beneficial effect on by standards who were not involved int he transaction, this effect causes a
positive externality
quotas change___ and taxes change ___ when they are used to deal with externalities
quantity, price
the highest price that a customer is willing and able to pay for a product is the customers
reservation price
if a government increases subsidies for childcare, there will be a ___ in the countrys labor market:
rightward shift of the labor supply curve
who gains and who loses when robots replace workers?
robot owners gain, and displaced workers lose
a major factor behind the exceptionally high salaries of superstars is:
technological advance, which has expanded the market for superstar talent
what three conditions must be present before a company can price discriminate?
the company can identify how much each customer is willing to pay; the product cannot be resold the company has market power
an employer should hire one more worker if
the marginal revenue product exceeds the wage
price discrimination can be successful only if
the product cannot be resold
the marginal social cost is:
the sum of marginal private costs and marginal external costs
total profit equals:
total cost minus total revenue
How do you calculate average cost
total cost/quantity
martas company definitely has economic profits in which of the following situations?
total costs are less than total revenue
profit margin =
total revenue -total cost / fixed costs
how does the price customers pay under price discrimination compare to the price with no price discrimination or the one that is set according to the marginal cost = marginal benefit?
under price discrimination, some customers pay a higher price, and some pay a lower price
when an employer makes decisions based on statistical discrimination, it is:
using observations about the average characteristics of a group to make inferences about an individual
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
The goal of price discrimination is to increase
Profit by charging each customer the highest price he is willing to pay
According to the cost benefit principle, the number of labor hours demanded will ____, and the number of labor hours supplied will ____ as the wage decreases
Rise, fall
When a price discriminating company lowers price for potential new customers who wouldn't buy otherwise, total economic surplus
Rises with the gain shared by sellers and buyers
With a ___ number of sellers in a market, ____ market power tends to exist in the market.
Smaller, more
Total revenue divided by quantity is called ___ or ____
Average revenue, price
