Suppose that in the clothing market, production costs have fallen, but the equilibrium price and quantity purchased have both increased. Based on this information we can conclude that:
A. the supply of clothing has grown faster than the demand for clothing.
B. demand for clothing has grown faster than the supply of clothing.
C. the supply of and demand for clothing have grown by the same proportion.
D. there is no way to determine what has happened to supply and demand with this
information.
Answer: B
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Suppose a firm is a price searcher in the product market and hires labor in a perfectly competitive labor market. If the wage rate is $20, the marginal product of the last worker hired is 5, and the firm is hiring the profit-maximizing amount of labor, then the marginal revenue from the last unit of output must be
a. $1 b. $1.50 c. $4 d. $5 e. $20
Which of the following is false?
a. A true or pure monopoly exists where there is only one seller of a product for which no close substitute is available. b. The situation in which one large firm can provide the output of the market at a lower cost than two or more smaller firms is called a natural monopoly. c. In monopoly, the market demand curve may be regarded as the demand curve for the firm because it is the market for that particular product. d. A monopoly firm is a price maker, and it will pick a price that is the highest point on its demand curve.
Suppose that a college physics experiment goes horribly wrong and releases an electronic pulse that renders all electronic equipment in the cities of Columbus, Cleveland and Cincinnati, Ohio permanently useless. No people are hurt, and no buildings are damaged. After the accident, the wages earned by Ohio workers will
a. increase because the marginal productivities of Ohio workers will increase. b. decrease because the marginal productivities of Ohio workers will decrease. c. decrease because the marginal productivities of Ohio workers will increase. d. increase because the marginal productivities of Ohio workers will decrease.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, Point F
A. is efficient and attainable. B. cannot be produced with the current state of technology. C. represents underallocation of resources. D. represents what the people want.