Deadweight loss from monopoly power is expressed on a graph as the area between the A) competitive price and the average revenue curve bounded by the quantities produced by the competitive and monopoly markets. B) competitive price line and the marginal cost curve bounded by the quantities produced by competitive and monopoly markets. C) competitive […]
The distinction between income and needs of the working poor is not vital for policy concerns. Indicate whether the statement is true or false ANSWER F
The authors cite a recent study of MBA programs that compares pre-MBA salaries with post-MBA salaries. For some of the highest ranked schools, the salary difference was roughly $100,000 per year, and the difference was roughly $60,000 for some schools ranked near the bottom of the top 20. Is it possible that the financial returns […]
The “efficiency wage” is the wage at which A) employees have no incentive to shirk. B) employees have an incentive to do the optimal (positive) amount of shirking. C) the cost of looking for work is equal to the value of the leisure time for the unemployed individual. D) there is no unemployment. E) there […]
Income disparities alone prove the existence of racial discrimination in the labor market. Indicate whether the statement is true or false ANSWER F
Which of the following cases are examples of industries that have potentially increasing costs due to scarce inputs? A) Petroleum production B) Medical care C) Legal services D) all of the above ANSWER D
Which of the following is true when the government imposes a price ceiling on a monopolist? A) Marginal revenue becomes horizontal. B) Marginal revenue is linear. C) Marginal revenue is kinkedhorizontal and then downward sloping. D) Marginal revenue is kinkeddownward sloping and then horizontal. ANSWER C
The federal minimum wage automatically increases every year for inflation. Indicate whether the statement is true or false ANSWER F
To deter a potential entrant, an existing firm in a market may threaten to sharply increase production so that the entrant will be left with a small share of the market. The firm can make this threat credible by limiting its own options, and possible actions of this type include: A) signing long-term sales contracts […]
Suppose that many consumers tend to over-state the discount rate that should be used for computing the net present value of education, just as they do when making investments in durable goods like cars and appliances. What would happen if consumers (as a group) started to use lower discount rates when making decisions about their […]
