The demand for oil rig workers off the coast of Louisiana is the same as the demand for oil pipeline workers in North Dakota. The annual earnings of Louisiana oil rig workers is 22% higher than the earnings of North Dakota oil pipeline workers. A possible explanation for this is
A. the amount of human capital needed to be a pipeline worker must be greater than the amount of human capital necessary to be an oil rig worker.
B. being an oil rig worker in Louisiana must be more dangerous than being a pipeline worker in North Dakota.
C. Louisiana oil rig workers can work only part of the year, but North Dakota oil pipeline workers can work year round.
D. Louisiana oil rig workers must face discrimination that is not encountered by North Dakota oil pipeline workers.
Answer: B
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How would the following events affect the market demand for laser printers?
a) A recession in the economy leading to a fall in income levels b) A five-fold increase in the price of printing paper
A firm could continue to operate for years without ever earning a profit as long as it is producing an output where
A) ATC > AVC. B) AFC < AVC. C) MR > AVC. D) MR < ATC.
Under the Bretton Woods system of fixed exchange rates,
a. devaluations were frequent and small. b. devaluations were usually unforeseen. c. the IMF ensured that exchange rates were never changed. d. speculators could profit from an attack on a weak currency.
Refer to the payoff matrix. Suppose that Speedy Bike and Power Bike are the only two bicycle manufacturing firms serving the market. Both can choose large or small advertising budgets. If this is a repeated game and the firms cooperate to maximize profits, which of the following outcomes would we expect to occur?
A. In repeated playing, the outcomes would alternate between cells A and D.
B. In repeated playing, the outcomes would alternate between cells B and C.
C. The two firms will agree to keep their advertising budgets small over time.
D. The game will reach a Nash equilibrium at cell A.