Consider an apple orchard owner deciding how to incentivize his fruit pickers. He pays per pound harvested but adjusts the compensation rate higher during poor harvest seasons. As a consequence
a. The compensation rate should be fixed at all times
b. The pickers might try to game the system by discouraging others from harvesting too much
c. The pickers would claim good harvests in order to be paid higher piece rates even during poor harvest seasons
d. None of the above
b
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You would expect that your firm is experiencing increasing returns to scale if
a. Long run average costs increase with output b. Long run average costs decrease with output c. Long run average costs are constant with respect to output d. None of the above
"I woke up earlier today to beat other fishermen to the fish and yet I caught the same number of fish at 5 a.m. as I did at noon." Which of the following best explains this occurrence? a. Many other fishermen also believe that they can catch a greater quantity of fish if they arrive earlier at the fishing area. So the area is crowded early in the day. b. The fish do not care when they eat, so
they are likely to bite on the bait at any time during the day. c. The catching of fish is mostly luck, so timing is not important. d. The early bird catches the worm.
Marginal analysis involves looking at the extra costs involved in a decision.
Answer the following statement true (T) or false (F)
An industry is comprised of 25 firms, each with an equal market share. What is the four-firm concentration ratio of this industry?
A. 0.25 B. 0.20 C. 0.12 D. 0.16