How can the demand for one good be affected by increased demand for another one?
(A) When goods are bought together, increased demand for one will decrease demand for the other.
(B) A drop in price for a good will increase demand for the good and its substitute.
(C) If goods are used together, increased demand for one will increase demand for the other.
(D) If goods are substitutes for each other, increased demand for one will increase demand for the other.
Ans: (C) If goods are used together, increased demand for one will increase demand for the other.
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For a monopsony, the marginal cost of labor curve lies above the labor supply curve because
A) to hire one more unit of labor requires that the wage be raised for all units of labor. B) to hire one more unit of labor requires that the wage be raised for just the last unit of labor hired. C) to hire one more unit of labor, the firm uses its monopsony power to not raise the wage it pays. D) to hire one more unit of labor requires that the firm offer a lower wage.
Leaving a handsome tip for the waiter in full view of your dinner date is a
a. Screening mechanism b. Signaling mechanism c. Way to waste money d. None of the above
The best definition of inflation is
a. a temporary increase in prices. b. an increase in the price of one important commodity such as food. c. a persistent increase in the general level of prices as measured by a price index. d. an increase in the purchasing power of the dollar.
A profit maximizing firm will hire additional workers until
A. the extra cost associated with hiring the last worker equals the price of the good produced. B. the additional cost associated with hiring the last worker equals the average wage rate of the workers. C. the extra revenue generated by the last worker hired equals zero. D. the additional cost associated with hiring the last worker equals the additional revenue generated by that worker.