Bob is the only carpet installer in a small isolated town. The above figure shows the demand curves of two distinct groups of customers-residential and business. If the marginal cost of installing carpet is a constant $1 per sq yard, what price does Bob charge each segment?
What will be an ideal response?
Setting MR = 1 in both markets yields a price of $5.50 in the residential market and $8 in the business market.
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Referring to a production possibilities curve and the goods being compared, depict the economic event. Millions of immigrants came to the United States in the second half of the 19th century to work on the transcontinental railroad (capital goods vs. consumer goods).
A. A movement from a point inside the curve to a point on or near the curve B. A movement from a point on or near the curve to a point inside the curve C. A shift in the entire curve to the right (outward) D. A shift in the entire curve to the left (inward)
Which of the following best describes how recessions are illustrated in the AD/AS diagram?
a. Recessions are illustrated in the AD/AS diagram when the equilibrium level of real GDP is substantially above potential GDP, while in years of resurgent economic growth the equilibrium will typically be close to potential GDP. b. Recessions are illustrated in the AD/AS diagram when the equilibrium level of real GDP is substantially below potential GDP, while in years of resurgent economic growth the equilibrium will typically be above potential GDP. c. Recessions are illustrated in the AD/AS diagram when the equilibrium level of real GDP is substantially below potential GDP, while in years of resurgent economic growth the equilibrium will typically be close to potential GDP. d. Recessions are illustrated in the AD/AS diagram when the equilibrium level of real GDP is substantially above potential GDP, while in years of resurgent economic growth the equilibrium will typically be below potential GDP.
Which of the following is an example of limit pricing?
A. In order to buy Microsoft Windows, you must also purchase Internet Explorer. B. Bus rides are cheaper for senior citizens than for other people. C. Prices are set low enough to drive other firms out of a market. D. Prices are set low enough to prevent other firms from entering the market.
The health care market is characterized by:
A. extensive negative externalities. B. significant positive externalities. C. perfect knowledge by both buyers and sellers. D. a perfectly inelastic demand.