Related to the Economics in Practice on page 51: The Amazon Kindle and the electronic textbooks available for the Kindle are complementary goods. Electronic textbooks and traditional, hard-copy textbooks are substitute products. If the price of electronic textbooks for the Kindle decreases,
A. demand for the Kindle increases, demand for electronic textbooks increases, and demand for traditional, hard-copy textbooks decreases.
B. the quantity of Kindles demanded increases, demand for electronic textbooks increases, and the quantity of traditional, hard-copy textbooks demanded decreases.
C. demand for the Kindle increases, the quantity of electronic textbooks demanded increases, and demand for traditional, hard-copy textbooks decreases.
D. demand for the Kindle decreases, the quantity of electronic textbooks demanded increases, and demand for traditional, hard-copy textbooks decreases.
Answer: C
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Suppose a monopolist is producing a level of output such that MR > MC. What should the firm do to maximize its profits?
A) The firm should do nothing — it wants to maximize the difference between MR and MC in order to maximize its profits. B) The firm should hire less labor. C) The firm should increase price. D) The firm should increase output.
Comfy Clothing is thinking of hiring Tom. If hired, he can increase total production by 100 units a week. He would cost the firm $1,500 a week in wages. If the price of each unit is $20,
a. The MR of hiring the worker is $1,500 b. The MC of hiring Tom is $1,500 c. The firm should hire Tom since MR>MC d. All the above
Identify the public good in the following
a. A small library with a limited collection of books b. A crowded children's park in your neighborhood c. The visit to a museum which charges a nominal entry fee d. The scenic view of the ocean from a beach
Since the demand for a narrowly defined product class (Fords, for example) is more elastic than the demand for a broadly defined product class (all automobiles), a union will be better able to raise the wages of its members without causing a reduction in their employment when
a. it can organize an entire industry, rather than just selective firms within the industry. b. it concentrates its organizational efforts on a single firm, ignoring the rest of the industry. c. the demand for the product is highly elastic. d. there are many good substitutes for union labor.