EXAM THREE

14)A market with a large number of sellers and a high level of product differentiation is known as -an oligopoly. -a monopolistically competitive market. -a perfectly competitive market. -a monopoly.

a monopolistically competitive market.

12)Compensating differentials lead to: -incomes based solely on productivity. -higher salaries for more unpleasant jobs. -lower salaries for more unpleasant jobs. -equal salaries for equal levels of human capital.

higher salaries for more unpleasant

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

higher the buyers' reservation price will be

11)The three key labor market decisions that you make do NOT include -whether to work -how many workers to hire -what kind of work to do -how many hours to work

how many workers to hire

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

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

11)In a labor market graph, _____ is measured on the vertical axis, and _____ is measured on the horizontal axis. -number of workers; product price -hours of labor; wage -product price; number of workers -wage; hours of labor

wage; hours of labor

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

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

17)Sun Do sells key chains with leather fobs for $12 and $9. The key chains are very similar and have identical manufacturing costs. The difference is that the stitching on the leather fob is in a less precise pattern on the $9 key chain than it is on the $12 key chains. What approach to price discrimination is Sun Do using? -Shopping around as a form of group pricing. -Offering alternate versions through timing as part of the hurdle method. -Segmenting the market through bad service. -Offering imperfect goods as part of the hurdle method.

Offering imperfect goods as part of the hurdle method

11)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 the ticket sales rose more than price. -No, it was a bad move because price did not rise as much as ticket sales. -No, it was a bad move because it added more to cost than revenue. -Yes, it was a good move because it added more to revenue than to cost.

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

18)When a player faces the same strategic interaction a fixed number of times, the player is engaged in _____ game. -a finitely repeated -an internally repeated -a temporarily constant -a limited repetition

a finitely repeated

18)When a player's best response is to take a different (but complementary) action to the other player, then both participants are playing _____ game. -a coordination -a strategic dilemma -a Coase equilibrium -an anti-coordination

an anti-coordination

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

assume that others will defer to your action

12)What impact has technology had on the difference between the income of the best engineers and that of good engineers? -It has eliminated the large gap that once existed. -It has increased the gap in income significantly. -It has had little impact on the gap in income. -It has decreased some of the gap in income.

it has increased the gap in income significantly

12)An employer who discriminates in hiring based on prejudice is likely to have higher costs than necessary because: -the employer pays a higher wage to the group of workers discriminated against. -less productive workers may be forgone in order to hire more productive workers who have preferred characteristics. -more productive workers may be forgone in order to hire less productive workers who have preferred characteristics. -all inputs will have higher prices as others shun the party who discriminates.

more productive workers may be forgone in order to hire less productive workers who have preferred characteristics

12)Kaila wants her employer to pay her 20% more for making night deliveries in a high-crime neighborhood than the day delivery people receive. Most of the delivery people are willing to make night deliveries in the neighborhood for only a 10% differential. Kaila is seeking: -more than a compensating differential because she has greater concerns than most workers. -a compensating differential based on her individual concerns about the risks. -less than a compensating differential because she is asking for more than others are. -a compensating differential because others are undervaluing her concerns.

more than a compensating differential because she has greater concerns than most workers.

14)What type of relationship exists between the level of a company's market power and the price that its owner is able to charge for its product? -positive -negative -circular -opposing

positive

17)A certain shampoo is on sale twice a year, every year. This is an example of a seller using _____ as a form of _____ to achieve price discrimination. -alternate versions; group pricing -price fluctuation; group pricing -alternate versions; the hurdle method -price fluctuation; the hurdle method

price fluctuation; the hurdle method

17)Corinne gives private art lessons to children. She wants to price discriminate based on the household income of her students. She does not know the exact household income of her students but wants to estimate it, to put them into different price segments. What easily verifiable measure of income could she use? -Child's participation in sports -Household income taxes -Public or private school attendance -Year in school

public or private school attendance

14)Which of the following markets is an example of a perfectly competitive market? -Dining chairs -Fast-food hamburgers -Apple computers -Shares of McDonald's stock

shares of McDonalds stock

11)In the labor market for computer programmers, the labor demand represents... -the employers looking to hire programmers. -the workers looking for a job as a programmer. -all the employers looking to hire. -all the workers looking for a job

the employers looking to hire programmers

11)The population of Japan is declining. What impact will this have on the labor market for optometrists in Japan? -There is a movement to a larger quantity on the optometrist labor supply curve. -There is a movement to a smaller quantity on the optometrist labor supply curve -The optometrist labor supply curve shifts rightward. -The optometrist labor supply curve shifts leftward.

the optomertrist labor supply curve shifts leftward

17)Price discrimination can be successful only if -the company lacks market power. -the product cannot be resold. -there are many sellers. -the market is highly competitive.

the product cannot be resold.

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

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

14)One of the market failures caused by market power is -high price. -reduced demand. -underproduction. -high costs.

underproduction

12)How does the pay of unionized workers compare with that of nonunionized workers in similar jobs, on average? -Unionized workers earn the same. -Unionized workers earn more. -Unionized workers earn less. -The average incomes are the same, but unionized workers' incomes vary far less.

unionized workers earn more

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

Agreements between sellers to increase their market power

12)Which of the following is NOT true regarding discrimination in labor markets? -Groups may differ in wages, due to differences in human capital or the types of jobs held. -Any differences in wages between members of different racial or age groups is due to discrimination. -Discrimination may result in some workers being underpaid. -Differences in effort or bargaining power across groups can lead to differences in wages across groups.

Any differences in wages between members of different racial or age groups is due to discrimination.

12)Which of the following is a valid explanation of why a star movie actor earns many times more than a star Broadway actor? -In one evening, many more people can view a movie than can see a Broadway play. -There is discrimination against Broadway actors but not against movie actors. -Broadway actors are far less skilled than movie actors. -Government regulations specify how much each type of actor earns.

In one evening, many more people can view a movie than can see a Broadway play.

18)What problem arises in coordination games with multiple equilibria? -The multiple equilibria mean that coordination yields no possible gain. -The equilibria make all players worse off. -It is difficult to achieve the commonly desired outcome. -Players have no incentive to coordinate.

It is difficult to achieve the commonly desired outcome.

11)The marginal revenue product of labor is equal to: -MPL × P. -MR + Wage. -MPL + P. -MR × Wage.

MPL × P.

17)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. -Marta is facing rising costs. -Marta has considerable market power because she is the only seller in town of of that kind of food. -Marta's product is good only if it is consumed immediately, making it difficult to store for resale.

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

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

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

17)Which of the following is NOT an example of the hurdle method of price discrimination? -Bundling to get a second good at a lower price. -Making customers put extra effort to get a lower price on a product. -Offering different versions of a product that sell for different prices. -Segmenting the market into identifiable groups with different prices.

Segmenting the market into identifiable groups with different prices.

17)What factor determines how many segments to divide your demand in for group pricing? -The amount of consumer information available to the company. -Whether the product is a tangible good or an intangible service. -The ability of the company to identify segments with similar reservation price. -The similarity of demand across segments.

The amount of consumer information available to the company.

12)What will happen in the labor market for aestheticians if the government deregulates the industry and no longer requires individuals to obtain a license to work as aestheticians? -The supply of workers will increase, resulting in a lower wage and higher quantity of labor. -The demand for workers will decrease, resulting in a lower wage and lower quantity of labor. -The supply of workers will decrease, resulting in a higher wage and lower quantity of labor. -The demand for workers will increase, resulting in a higher wage and higher quantity of labor.

The supply of workers will increase, resulting in a lower wage and higher quantity of labor

17)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 have a high reservation price for pizza. -Their demand for pizza is highly inelastic. -They are price-sensitive. -Their marginal benefit from pizza is very high.

They are price-sensitive.

17)Price discrimination leads to _____ than a one-price system. -fewer buyers -a more efficient output -a lower average cost -a lower average price

a more efficient output

18)Once an original decision has been made, what happens on a game tree with each additional decision made by a player? -A new tree is created. -A root sprouts downward. -A merger occurs between two branches. -A new branch is formed.

a new branch is formed

17)Which criteria for market segmentation would be easiest to use for an online retailer? -Student or nonstudent status -Income -Customer height -Account address

account address

18)When using coordination games to look at the issue of bank runs, the best outcome occurs when: -people do not use the banking system. -people run to withdraw their money from the bank. -some people, but not all, keep their money in the bank. -all people keep their money in the bank.

all people keep their money in the bank.

18)Coordination problems can be solved through each of the following approaches EXCEPT: -communication. -focal points, culture, and norms. -backward reasoning. -laws and regulations.

backward reasoning

17)When a company practices price discrimination, it will keep adding customers until the point where the -last customer's marginal benefit equals the marginal quantity. -last customer's marginal benefit exceeds the company's marginal cost. -company's marginal cost exceeds the last customer's marginal benefit. -company's marginal cost equals the last customer's marginal benefit.

company's marginal cost equals the last customer's marginal benefit.

11)The costs of working do NOT include what -could have been done with the time spent commuting. -could have been bought with the income earned. -it would cost to buy a professional wardrobe if needed for the job. -could have been done during the time spent at work.

could have been bought with the income earned

11)Why does an employer's labor demand curve slope downward? -diminishing marginal product -marginal cost adjustment -substitution rule -diminishing product demand

diminishing marginal product

18)A simultaneous game is one in which: -each player learns of the other's intention at the same time, before the final choices are made. -the alternative outcomes all occur on the same time line. -regardless of which choices are made, the resulting outcome occurs at the same time. -each player must choose without knowing the other player's choice.

each player must choose without knowing the other player's choice.

17)Consumer backlash against price discrimination often focuses on the issue of -honesty. -consumers' needs versus their wants. -profit. -fairness.

fairness

17)A furniture store owner allows its salespersons to lower a price by up to ten percent to gain a sale if the buyer appears price sensitive. The owner also instructs salespersons to confer with management about the possibility of higher discounts if needed to make a sale. This example of individually negotiated prices is a form of price discrimination known as -alternate versions. -bundling. -haggling. -bad service.

haggling

11)The income effect measures -how people's choices change when they have to work more. -the change in welfare when income rises. -how people's choices change when they have more income. -the impact of change in relative prices.

how people's choices change when they have more income

12)The accumulated knowledge and skills that make a worker more productive are known as: -labor enhancement. -efficiency investment. -human capital. -labor factoring.

human capital

11)Consideration of the benefits of choosing an occupation should NOT include -if you find it easy. -salary or wage. -the amount you love the work. -the trajectory of income over a career.

if you find it easy

12)Callie's firm uses a proprietary and complicated production process to ensure product quality. Her workers are carefully trained in this process as soon as they are hired. Callie thereby: -prevents employees from leaving the firm. -raises production costs. -invests in job-specific skills. -ensures that all workers have the needed general skills.

invests in job-specific skills

12)Unions are organizations that: -enable groups of workers to start their own companies. -jointly represent a group of workers in negotiating with employers. -local governments sponsor to set work safety standards for employers. -represent employers in negotiating with employees.

jointly represent a group of workers in negotiating with employees

11)If a company incurs expenses to start providing childcare at work so that employees can have lunch with their preschool children, the company's demand curve for labor will shift to the -right because workers will be more loyal. -left because workers will be more loyal. -left because employees are more expensive to the firm. -right because employees are more expensive to the firm.

left because employees are more expensive to the firm.

12)Employees will be motivated to work hard and try to help their employer succeed if the company: -lives up to a core set of ideals that workers identify with. -provides compensating differentials. -focuses on extrinsic rewards. -uses carrots and sticks.

lives up to a core set of ideals that workers identify with

14)The higher the level of market power among the sellers in a market, the _____ when the Rational Rule for Sellers is applied. -closer marginal revenue is to price -lower the market demand -higher the marginal cost -lower the market output

lower the market output

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

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

12)The three sources of discrimination do NOT include: -malevolent bias. -statistical discrimination. -implicit bias. -prejudice.

malevolent bias

According to the Rational Rule for Sellers, a seller should choose the output level where _____ and the price level _____. -maximum revenue is obtained; that is on the seller's demand curve for that output -marginal cost equals marginal revenue; that is on the seller's demand curve at that output level -average total cost is minimum; that is associated with maximum revenue -sales are maximum; where revenue is maximum

marginal cost equals marginal revenue; that is on the seller's demand curve at that output level

11)The marginal revenue from hiring an additional worker is known as -marginal worker revenue. -labor marginal revenue. -labor marginal product. -marginal revenue product.

marginal revenue product

11)If the demand for Ono Yo's organic frozen yogurt increases, then the _____ Ono Yo's workers will _____. -wages of; fall -productivity of; rise -marginal revenue product of; increase -demand for; hold steady

marginal revenue product of; increase

14)_____ using specific business practices that increase a seller's market power and excludes other sellers is illegal under U.S. law. -Rationalizing -Monopolizing -Powering -Differentiating

monopolizing

11)The labor supply curve for social workers will shift to the right when: -the wages of all workers rise -nonwage benefits increase for social workers -the govenment increases benefits for those who are not working -wages in other occupations rise

nonwage benefits increase for social workers

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

not a price taker

14)In which market structure do the actions of a rival have a significant impact on your operations? -Monopoly -Oligopoly -Monopolistic competition -Perfect competition

oligopoly

11)The Rational Rule for Workers is to work -as long as the marginal cost exceeds the marginal benefit. -one more hour as long as the wage exceeds the cost of necessities. -one more hour as long as the wage is at least as large as the marginal benefit of another hour of leisure. -as long as there is a desire for more income that exceeds the loss of income from not working.

one more hour as long as the wage is at least as large as the marginal benefit of another hour of leisure

18)When resources are shared or owned in common, the Nash equilibrium leads to: -higher profits than with unshared resources. -underuse of resources. -lower profits than with unshared resources. -overuse of resources.

overuse of resources

12)Linking your workers' earnings to their performance is called: -pay-for-performance. -incentivizing profit. -differential performance. -productivity bracketing.

pay-for-performance

12)A preconceived bias against a group that's not based on reason or experience is known as: -compensatory bias. -implicit bias. -statistical discrimination. -prejudice.

prejudice

14)When buyers in a market have market power, then the -product price is higher. -number of sellers rises. -product price is lower. -number of sellers falls.

product price is lower

12)How can a company's hiring manager attract workers who are motivated to advance in their field? -Provide a retirement savings plan. -Offer gym memberships. -Provide training. -Avoid discrimination.

provide training

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

punish rivals who do not cooperate.

12)Studies of the minimum wage indicate that minimum wage laws _____ employment opportunities for low-skilled workers, but there is less agreement regarding _____. -increase; whether wages rise or fall -reduce; the amount of the reduction -increase; the amount of the increase -reduce; whether wages rise or fall

reduce; the amount of the reduction

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

reducing; the price is above its marginal cost

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

reservation price

12)When the government requires that a person have a license to work in a particular occupation, then in the labor market for that occupation: -supply increases. -demand decreases. -supply decreases. -demand increases.

supply decreases

14)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 drug prices would have been even higher. -Larger quantities of the drugs would have been produced. -The drugs would not have been developed. -The drug prices would have been lower from the start.

the drugs would not have been developed

11)Which of the following would shift the labor supply curve? -Technological advancement increases worker productivity. -The government increases its provision of childcare services. -There is more effective management at companies. -Demand increases for the output produced by workers

the government increases its provision of childcare services

17)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 _____. -segment blocking; marginal benefit -the hurdle method; reservation price -impediment pricing; marginal benefit -the hurdle method; marginal cost

the hurdle method; reservation price

11)The Rational Rule for Employers implies that they keep hiring until... -revenue equals cost. -the wage equals the marginal revenue product of the last worker hired. -marginal product equals marginal revenue. -the wage equals marginal product.

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

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

there is only one seller

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

they would not be able to hire anyone

11)The opportunity cost of working is -what you can buy because you worked. -too high to even consider not working. -the wage you earn for the time spent working. -what you would have done during the time if you were not working.

what you would have done during the time if you were not working

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

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

18)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 check mark is put next to each player's best response, and there is a cell with no check marks in it. -one cell contains the highest gain for each player, although it may not be the player's best response. -each player has an equilibrium that is opposite that of the other player, so they are not in conflict.

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

12) When it is hard to monitor worker productivity, employers often pay: -a wage based on worker qualifications. -a lower wage. -a random wage. -a higher wage.

a higher wage

14)Walmart has a large aisle that displays many different kinds of toothpastes. This observation indicates that the toothpaste market is -a perfectly competitive market. -a monopolistically competitive market. -an oligopoly. -a monopoly.

a monopolistically competitive market

17)When price discriminating, a company owner should set price _____ for each customer. -equal to marginal cost -at the competitive market equilibrium -at or just below the marginal benefit -no higher than marginal cost

at or just below the marginal benefit

14)Price ceilings tend to create shortages when used to -bring down price in a competitive market. -reduce exploitative use of market power. -bring down price to the level of marginal cost. -create a price above equilibrium.

bring down price in a competitive market

12)An efficiency wage is a: -higher wage paid to encourage greater worker productivity. -system of tying wage rates to overall factory efficiency rather than personal productivity. -higher wage paid to reward workers who show greater productivity. -wage that rises when workers invest in their human capital.

higher wage paid to encourage greater worker productivity

11)Consider the labor market, predict which of the following create an incentive for investment in capital? -Higher wages -Higher capital prices -Lower land prices -Lower wages

higher wages

17)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 -group pricing. -bad service. -fluctuating prices. -quantity discount.

quantity discount

14)How would the discount effect on marginal revenue differ for a seller increasing sales from 100 units to 101 units compared to an increase in sales from 1,000 units to 1,001 units? -The discount effect would be larger for a change from 100 to 101 units than 1,000 to 1,001 units. -The discount effect would be smaller for a change from 100 to 101 units than 1,000 to 1,001 units. -The discount effect would be the same in both situations and would be larger than price. -The discount effect would be the same in both situations and would be less than price.

The discount effect would be smaller for a change from 100 to 101 units than 1,000 to 1,001 units.