micro exam 3

if maria charges $8, then jose should charge ______. if maria charges $4, then jose should charge ______

$4, $4

The graph shows the marginal social cost, demand, and supply curves in the cinnamon roll market. A corrective tax of _____ per unit will move the cinnamon roll market to the socially optimal output of _____ units.

$4, 4

If Larry uses the Rational Rule for Employers, how many workers will he hire?

2

what is collusion

agreement between sellers to limit competition; one of the most common ways is price fixing

a higher wage paid to encourage greater worker productivity is

an efficiency wage

when a seller has a high level of market power, the seller

can raise its price without losing too many customers

perfect price discrimination consists of

charging each customer their reservation price

the marginal private benefit is the

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

marginal revenue product is the

extra revenue produced by hiring an additional worker

when a good is nonrival and nonexcludable, it suffers from the _____ problem

free rider

which graph shows the scenario where the substitution effect dominates labor supply decisions

graph a

price discrimination by charging different prices to different groups of people is called

group pricing

compensating differentials lead to

higher salaries for more unpleasant jobs

the supply curve of a firm is also its

marginal private curve

the most common market structures are

monopolistic competition and oligopoly

an equilibrium in which the choice that each player makes is a best response to the choices other payers are making

nash equilibrium

to accumulate human capital you can

obtain it through education, training, and experience

When a market transaction has a beneficial effect on bystanders who were not involved in the transaction, this effect is called:

positive externailty

quotas change ______ and taxes change ______ when they are used to deal with externalities

quantity, price

a major factor behind the exceptionally high salaries of superstars is

technological advance, which has expanded the market for superstar talent

the marginal product of labor is the

the extra production that occurs from hiring an extra worker

a reservation price is

the highest price that a customer is willing to pay for a product

an employer should hire one more worker if

the marginal revenue product exceeds the wage

the marginal social cost is

the sum of the firm's private costs and the external costs

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