"A firm should continue to hire more workers as long as wages are low." Do you agree or disagree? Why?
What will be an ideal response?
Disagree. The firm should hire workers up to the point at which the additional cost associated with hiring the last worker is equal to the additional revenue generated by hiring that worker. What is ignored in the statement is the revenue associated with hiring an additional worker: Even if wages are low, the additional revenue associated with the additional worker may not be enough to cover the additional costs associated with the wages.
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Tommy buys only soda and pizza and is buying the amounts that maximize his utility. The marginal utility from a soda is 5 and the price of a soda is $1. The marginal utility from a slice of pizza is 10. The price of a slice of pizza must be
A) $10. B) $2. C) $1. D) some amount that cannot be calculated without more information.
Why is it difficult for economists to predict the price and output policy that will emerge in oligopolistic markets?
a. Economists cannot determine if barriers to entry exist in a market. b. Economists cannot predict the reactions that firms will have to the actions and decisions of other firms. c. The government prevents economists from acquiring the information that would lead to good predictions. d. Firms have a set price and output policy, but the policy is concealed to discourage competition.
Economic theory suggests that discriminating employers will be driven from the marketplace when the output market is competitive. Why?
A. The government mandates that the employer not act on his or her desire to discriminate. B. A competitive output market requires all workers to be paid the same wage. C. Workers will refuse to work for a discriminating employer. D. Customers will refuse to purchase from a discriminating employer. E. Discrimination imposes an additional cost on the employer, and high-cost firms are eventually driven out of a competitive output market.
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.