Suppose the market for autoworkers is initially in equilibrium, but then the automakers purchase capital goods that are a substitute for workers. What happens in the market for autoworkers?
A) The equilibrium wage rate will increase and the equilibrium quantity of labor will decrease.
B) The equilibrium wage rate and the equilibrium quantity of labor will both increase.
C) The equilibrium wage rate and the equilibrium quantity of labor will both decrease.
D) The equilibrium wage rate will decrease and the equilibrium quantity of labor will increase.
Answer: C
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Two identical firms have access to a spring. Their marginal cost of bottling water from the spring is a constant 10ยข per bottle. The market demand for bottled spring water is P = 250 - 20Q, where P is the price (in cents per bottle) and Q is the quantity demanded (in hundreds of bottles).
(i) Suppose the two firms form a successful cartel. How much bottled water will the firms produce, and what price will they charge? (ii) Suppose the firms behave as in the Bertrand model of oligopoly. How much bottled water will the firms produce, and what price will they charge? (iii) Suppose the firms behave as in the Cournot model of oligopoly. How much bottled water will the firms produce, and what price will they charge?
A purely self-interested diner is more likely to tip:
A. only when dining in a very up-scale restaurant. B. only when dining in a restaurant at which he often eats. C. always, to assure good service. D. whenever he can afford to.
If the Federal Reserve conducts an open market sale, the
A) interest rate will decrease. B) interest rate will increase. C) interest rate will not change. D) money supply is increased.
Only in the case of perfectly inelastic demand will consumers pay the full amount of a specific tax or ad valorem tax
Indicate whether the statement is true or false