Bob purchases a book, and his consumer surplus is $3 . If Bob is willing to pay $8 for the book, then the price of the book must be
a. $3.
b. $8.
c. $5.
d. $11.
c
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An article on how prices in South Bend, Indiana rise during Notre Dame home football games noted: "For the Sept. 16 game against the University of Michigan, the South Bend Marriott is charging $649 a night for a double room
The Marriott's regular weekend price is $149 a night." Which of the following statements is true? A) The Marriott has adopted this pricing strategy to capitalize on arbitrage profits. B) There is no evidence of price discrimination; the Marriott is responding to increased demand for hotel rooms in the face of constant supply. C) The Marriott is practicing first-degree price discrimination by charging what the market will bear. D) This is evidence of third-degree price discrimination because hotel accommodation on a particular day is not a product that can be resold later.
Allocative efficiency means that among the points on the production possibility frontier, the point that is chosen is socially preferred. In this scenario, the measure of social benefit reflects:
a. what buyers are willing to pay for the product. b. a noneconomic benefit, such as improving people’s lives. c. lowering the cost of goods so that more people may purchase them. d. the social values of the corporation.
When demand increases, in the short run the purely competitive firm:
A. can alter available inputs and output as well as the size of the plant. B. will earn higher profits or experience smaller losses. C. will experience no change in costs as it steps up production. D. will spend more on advertising.
If the hourly wage of U.S. workers is $16, the hourly wage of Mexican workers is $2, and U.S. workers produce 9 times as much output per hour as Mexican workers, then, all else equal, it would be efficient to locate production facilities in:
A. Mexico since the cost per unit of output will be higher. B. the United States since the cost per unit of output will be lower. C. Mexico since the cost per unit of output will be lower. D. the United States since the cost per unit of output will be higher.