Related to the Economics in Practice on page 83: Which of the following best explains why the people who wait for hours to acquire tickets to free performances earn less on average than the people who actually see those performances?
A. People interested in live performances are likely to have access to other forms of entertainment, such as television and radio.
B. High-wage individuals are more likely to have schedule conflicts that prevent them from using their tickets.
C. The value of time spent waiting in line is less for people who earn less money.
D. People who earn more money are less likely to be aware of the opportunity to acquire free tickets.
Answer: C
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Two firms, Industrio and Capitalista, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below. Both firms currently use process A, and each emits 4 tons of smoke per day. The government is considering two plans to reduce pollution: requiring both firms to reduce pollution by 25 percent or auctioning pollution permits. Each permit would entitle the owner to emit one ton of smoke per day. Without a permit, no smoke can be emitted.Process(smoke/day) A(4 tons/day) B(3 tons/day) C(2 tons/day) D(1 ton/day) E(0 tons/day) Cost to Industrio ($/day) $350$400$500$700$1,000 Cost to Capitalista
($/day) $225$250$290$400 $600Suppose the government decides to auction 6 permits. The government conducts the auction by starting at a price of $1 and asking how many permits each firm wants to buy at that price. If the total is more than 6, it raises the price by $1 and asks again until the total quantity demanded falls to 6. Under this system, each permit will sell for ________ with Industrio buying ________ and Capitalista buying ________. A. $41; 4; 2 B. $31; 2; 4 C. $101; 3; 3 D. $51; 4; 2
Suppose the production function for T-shirts can be represented as q = L0.25K0.75. Show that the marginal productivity of labor diminishes in the short run
What will be an ideal response?
Market structure is determined by the
a. volume of discounts, the quantity of foreign exchange, and the effects of Federal Reserve policy b. influence of government policy, the number of qualified buyers, and the effect of generally accepted accounting principles c. number of buyers and sellers, whether the product is standardized, whether there is free entry and exit, and how well informed the buyers and sellers are about the market d. volume of discounts, the effect of generally accepted accounting principles, and Federal Reserve policy e. influence of government policy, the quantity of foreign exchange, and the effects of Federal Reserve policy
When the overall price level decreases, what is the effect on the economy?
a. There is an increase in the quantity of real GDP that producers are willing and able to supply.
b. Producers are willing and able to supply less real output.
c. Movement occurs along the short-run aggregate supply curve from point A to point B.
d. The short-run aggregate supply curve shifts leftward.