The Alpha Car Wash is known for the quality way in which every car is hand cleaned. The Beta Car Wash uses machines, so consumers are generally willing to pay a higher price for Alpha's services. The Auto Washers union at Alpha has just succeeded in obtaining a substantial wage increase. What will likely happen as a result?
Higher wages will cause the price of an Alpha car wash to increase. Substitution in consumption will occur as more consumers choose to wash their cars at Beta. Substitution in production is also likely as the Alpha owners adopt labor-saving devices and machinery that will reduce the need for the now higher priced labor. In sum, Alpha will wash fewer cars at a higher price and with fewer workers.
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The FDIC fee system encourages depository institutions to
A) make riskier loans than they would otherwise. B) operate their institutions in too conservative a fashion. C) seek only a modest rate of return. D) reject loans that probably would have been profitable.
Refer to the information provided in Figure 5.2 below to answer the question(s) that follow.
?Figure 5.2Refer to Figure 5.2. If the price of a hamburger decreases from $10 to $6, the price elasticity of demand equals ________. Use the midpoint formula.
A. -0.5 B. -2.0 C. -20 D. -200
When a monopolist sells two units of output its total revenue is $600. When a monopolist sells three units of output its total revenue is $630. In order to sell three units of output instead of only two, the monopolist must
A. decrease its price by $30 per unit. B. increase its price by $30 per unit. C. decrease its price by $90 per unit. D. make no change in price and increase output by one unit.
Refer to the labor market diagram where D is the labor demand curve, S is the labor supply curve, and MRC is the marginal resource (labor) cost curve. If an inclusive union was able to get the monopsonist to pay a $6 wage rate, then:
A. the supply curve would be perfectly elastic for the first four workers, but the MRC curve
would be unaffected.
B. the supply curve would be perfectly elastic for all workers and the MRC curve would
coincide with it.
C. the supply curve would be perfectly elastic for the first four workers and the MRC would be
$6 for the first four workers.
D. eight workers would be hired.