Econ Test 3

Refer to Table 17-11. If both firms follow a dominant strategy, Firm B's profits (losses) will be

$-10

Refer to Table 17-11. When this game reaches a Nash equilibrium, profits for Firm A and Firm B will be

$-10 and $-10, respectively

Refer to Table 17-13. Suppose the owners of Lopes and HomeMax meet for a friendly game of golf one afternoon and happen to discuss a strategy to optimize growth related profit. If they both agree to cooperate on a strategy that maximizes their joint profits, annual profit will grow by

$2.0 million for Lopes and by $2.5 million for HomeMax.

The utilitarian case for redistributing income is based on the assumption of

diminishing marginal utility

Refer to Table 17-13. If both stores follow a dominant strategy, Lopes's annual profit will grow by

$1.0 million.

Refer to Table 17-11. If both firms follow a dominant strategy, Firm A's profits (losses) will be

$-10

Refer to Figure 21-17. Given the budget constraint depicted in the graph, the consumer's optimal choice will be point

C.

Refer to Table 17-12. Assume that trade negotiators meet to discuss trade policy between the United States and Farland. If neither party to the negotiation is able to trust the other party, then

each should follow its dominant strategy.

Competitive firms that maximize profits will hire workers until the value of the marginal product of labor

equals the wage.

Refer to Figure 21-17. Bundle D represents a point where

MRSxy < Px/Py.

Refer to Figure 21-17. Bundle C represents a point where

MRSxy = Px/Py.

Refer to Figure 21-17. Bundle B represents a point where

MRSxy > Px/Py.

A utilitarian government will pursue policies that redistribute income from the rich to the poor. One problem with these policies is that

everyone has less incentive to work hard

Because a firm's demand for a factor of production is derived from its decision to supply a good in the market, it is called a

derived demand.

The negative slope of the value of marginal product curve is most easily explained by

diminishing marginal product.

Refer to Table 17-13. When this game reaches a Nash equilibrium, annual profit will grow by

$1.5 million for HomeMax and by $1.0 million for Lopes.

Refer to Table 17-13. If both stores follow a dominant strategy, HomeMax's annual profit will grow by

$1.5 million.

Diane's Auto World installs tires on automobiles, light trucks, and sport utility vehicles. She is a profitmaximizing business owner whose firm operates in a competitive market. The marginal cost of installing a tire is $10. The marginal productivity of the last worker that Diane hired was 2 tires per hour. What is the maximum hourly wage that Diane was willing to pay the last worker hired?

$20

A competitive firm sells its output for $30 per unit. The marginal product of the 10th worker is 20 units of output per day; the marginal product of the 11th worker is 16 units of output per day. The firm pays its workers a wage of $150 per day. For the 11th worker, the value of the marginal product of labor is

$480.

Refer to Table 17-12. If both countries follow a dominant strategy, the value of trade flow benefits for the United States will be

$65 b.

Refer to Table 17-12. If both countries follow a dominant strategy, the value of trade flow benefits for Farland will be

$75 b.

Refer to Figure 21-17. It would be possible for the consumer to reach I2 if

All of the above would be correct.

Refer to Scenario 19-5. In a competitive market for piano movers, why might Billy's wage differential persist?

Customers do not like Billy because he has a bad attitude.

Refer to Scenario 19-4. Competition in the market for haircuts is consistent with which of the following statements?

Firms hiring bald barbers will enter the market, increasing the demand for bald barbers.

Rosie's Flower Shop sells floral arrangements for $20 each. If Rosie hires 10 workers, she can sell 600 arrangements per week. If she hires 11 workers, she can sell 650 arrangements per week. Rosie pays each of her workers $400 per week. Which of the following is correct?

For the 11th worker, the marginal revenue product is $1,000.

Refer to Scenario 19-5. Why might an economist be skeptical of Billy's discrimination complaint?

In a competitive market, employers pay employees based on their value to the firm

Refer to Table 17-12. Pursuing its own best interests, the U.S. will renew MFN status with Farland

None of the above is correct. In pursuing its own best interests, the United States will in no case renew MFN status with Farland.

Refer to Table 17-11. Pursuing its own best interests, Firm A will concede that cigarette smoke causes lung cancer

None of the above. In pursuing its own best interests, Firm A will in no case concede that cigarette smoke causes lung cancer.

Refer to Table 17-11. Pursuing its own best interests, Firm B will concede that cigarette smoke causes lung cancer

None of the above; in pursuing its own best interests, Firm B will in no case concede that cigarette smoke causes lung cancer

Refer to Figure 17-1. Which of the following statements is correct?

Regardless of the strategy pursued by ABC, XYZ's best strategy is to produce a high level of output, and for that reason producing a high level of output is a dominant strategy for XYZ.

Sally runs a hair styling salon. Sally is a profit-maximizing owner whose firm operates in a competitive market. The marginal cost of a haircut is $11. What is the maximum wage that Sally will pay her stylists?

There is insufficient information to answer this question.

Refer to Table 17-12. If trade negotiators are able to communicate effectively about the consequences of various trade policies (i.e., enter into an agreement about the policy they should adopt), then we would expect the countries to agree to which outcome?

United States $130 b and Farland $275 b

Refer to Table 17-12. When this game reaches a Nash equilibrium, the value of trade flow benefits will be

United States $65 b and Farland $75 b.

A society consists of three individuals: Arthur, Billie, and Chris. In terms of income and utility, Arthur is currently best-off, Billie ranks in the middle, and Chris is worst-off. Which of the following statements is correct?

Utilitarianism suggests that government policies should strive to maximize the sum of all three individuals' utility

If the value of the marginal product of labor exceeds the wage, then hiring another worker increases the firm's

all of the above

Refer to Scenario 19-5. Which of the following statements would weaken Billy's case against his employer?

all of the above

Refer to Table 17-12. This particular game

all of the above

The goal of utilitarians is to

apply the logic of individual decision making to questions concerning morality and public policy.

A utilitarian government must

balance the gains from greater equality against the losses from distorted incentives.

Refer to Scenario 19-4. If consumers do not discriminate between bald barbers and barbers with hair, then

barbershops that hire bald barbers will be more profitable than those that don't.

Refer to Scenario 19-4. If some consumers in the market for haircuts have a strong preference for having their hair cut by a barber who is not going bald, then

barbershops that hire barbers with hair will be able to charge a higher price for a haircut to those consumers who have a strong preference for barbers with hair.

Refer to Figure 17-1. If this game is played only once, then the most likely outcome is that

both firms produce a high level of output.

The basic tools of supply and demand apply to

both markets for goods and services and markets for labor services

. Refer to Table 17-13. Increasing the size of its store and parking lot is a dominant strategy for

both stores

Refer to Scenario 19-4. If consumers do not discriminate between bald barbers and barbers with hair, then

competitive pressure in the market for haircuts will eventually cause the equilibrium wage in both markets to be identical.

Utilitarians believe

in the assumption of diminishing marginal utility.

Refer to Table 17-13. Pursuing its own best interest, Lopes will

increase the size of its store and parking lot regardless of the decision made by HomeMax

Refer to Table 17-13. Pursuing its own best interest, HomeMax will

increase the size of its store and parking lot regardless of the decision made by Lopes.

. Diminishing marginal product is closely related to

increasing marginal cost.

. Which of the following is not an example of a factor of production?

interest

In the parable of the leaky bucket, a fundamental problem with government redistribution programs is identified. As long as the government only has "leaky buckets" at its disposal,

it should not try to reach complete equality in income.

Which of the following is an example of a factor of production?

land

Suppose a society consists of only two people, John and Jane. A utilitarian would say that the proper role of government in this society is to

maximize the sum of John's utility and Jane's utility

The marginal product of labor is defined as the change in

output per additional unit of labor.

Refer to Figure 17-1. The dominant strategy for ABC is to

produce high output, and the dominant strategy for XYZ is to produce high output.

The goal of utilitarians is to

redistribute income based on the assumption of diminishing marginal utility

The concept of diminishing marginal utility is embedded in the utilitarian rationale for

redistributing income

Refer to Table 17-13. Suppose the owners of Lopes and HomeMax meet for a friendly game of golf one afternoon and happen to discuss a strategy to optimize growth related profit. They should both agree to

refrain from increasing their store and parking lot sizes

Refer to Table 17-12. Pursuing its own best interests, Farland will impose trade sanctions against U.S. firms

regardless of whether the U.S. renews MFN status with Farland.

Diminishing marginal product occurs when

the marginal product of an input decreases as the quantity of the input increases

To maximize profit, a competitive firm hires workers up to the point of intersection of the

value of marginal product curve and the wage line.