Alex sees that his neighbors' lawns all need mowing. He offers to provide the service in exchange for a wage of $20 per hour. Some neighbors accept Alex's offer and others refuse. Economists would describe Alex's behavior as:
A. rational self-interest because he is attempting to increase his own income by identifying
and satisfying someone else's wants.
B. greedy because he is asking for a high wage that some of his neighbors can't afford to pay.
C. selfish because he is asking for a wage that is higher than others might charge.
D. irrational because some neighbors refused his offer.
Answer: A
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Kate and Alice are small-town ready-mix concrete duopolists. The market demand function is Qd = 20,000 - 200P where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $80 per cubic yard. Suppose Kate enters the market first and chooses her output before Alice. What is the difference in Kate's profit when she enters the market first compared to when Kate and Alice choose their outputs simultaneously?
A. When Kate enters the market first, her profit is $13,333.33 higher. B. When Kate enters the market first, her profit is $5,000 higher. C. When Kate enters the market first, her profit is $1,111.11 higher. D. When Kate enters the market first, her profit is $3,888.89 lower.
According to Simon Kuznets, which of the following is likely to induce economic growth in the automobile industry of a country?
a. An increase in the amount of labor used in the industry b. A government subsidy for automobile production c. An increase in the import of spare parts for the engines d. An increase in the number of paint bays per factory e. The replacement of manual assembly lines with robots
How do subsidies distort trade patterns and lead to inefficiencies?
A practice whereby a seller charges different prices to different consumers of the same product or service is called
a. price discrimination. b. oligopolistic pricing. c. stay-out pricing. d. monopolistic pricing.