question
Prisoner's dilemma games imply that cooperative behavior between two people or two firms always breaks down. But reality teaches us that people and firms often cooperate successfully to achieve their goals. Why do the results from prisoner's dilemma games fail to predict real-world results?
answer
The prisoner's dilemma does not apply to most business situations that are repeated over and over.
question
Compensating differentials are associated most closely with which of the following?
answer
Hazardous jobs
question
A duopolists' dilemma occurs when two firms in a market would be better off if
answer
both firms act jointly as a cartel and chooses the best price.
question
The perfectly competitive market structure benefits consumers because
answer
firms are forced by competitive pressure to be as efficient as possible.
question
What is a prisoner's dilemma?
answer
a game in which players act in rational, self-interested ways that leave everyone worse off
question
Which of the following is an example of signaling in a market with asymmetric information?
answer
Certification of used cars by third parties
question
A ________ is an extensive -form representation of a game.
answer
Payoff matrix
question
The processes a firm uses to turn inputs into outputs of goods and services is called
answer
Technology
question
If the demand for labor is unchanged, population growth will increase the supply of labor and increase the equilibrium wage.
answer
true
question
Game theory is applicable to oligopoly behavior because oligopolists
answer
Use strategic behavior
question
Marginal cost is calculated for a particular increase in output by
answer
dividing the change in total cost by the change in output.
question
A natural monopoly is most likely to occur in which of the following industries?
answer
an industry where fixed costs are very large relative to variable costs
question
An increase in wages raises the opportunity cost of leisure and leads to an increase in the quantity of labor supplied.
answer
true
question
If a worker can produce 20 units of output which can be sold for $4 per unit, what is the maximum wage that firm should pay to hire this worker?
answer
$80
question
Discrimination that occurs when people's preferences cause them to discriminate against a certain group is referred to as
answer
taste based discrimination
question
A reason why a perfectly competitive firm's demand for labor curve slopes downward is that
answer
in the short run, as more labor is hired, labor's marginal product falls because of the law of diminishing returns.
question
Which of the following factors will not cause the labor demand curve to shift?
answer
the wage rate
question
Which of the following statements is true?
answer
Employers are willing to forego profits when engaging in taste-based discrimination.
question
Which one of the following about a monopoly is false?
answer
A monopoly must have some kind of government privilege or government imposed barrier to maintain its monopoly.
question
which of the following statements is false?
answer
When marginal cost equals average total cost, average total cost is at its highest value.
question
Consider the market for opticians. What is likely to happen to the equilibrium wage and quantity of opticians if more and more people turn to laser eye surgery instead of wearing glasses or contact lens?
answer
The equilibrium wage and the equilibrium quantity of opticians fall.
question
A Nash equilibrium is
answer
reached when each player chooses the best strategy for himself, given the other strategies chosen by the other players in the group.
question
Of the factors that are within the control of the firm's owners, the most important factors that make a firm successful are
answer
the differentiation of its products and the production of products at a lower average cost than competing firms.
question
Adam spent $10,000 on new equipment for his small business, "Adam's Fitness Studio." Membership at his fitness center is very low and at this rate, Adam needs an additional $12,000 per year to keep his studio open. Which of the following is true?
answer
Correct The $10,000 Adam spent on equipment is a fixed cost of business and the $12,000 he'll need to continue operations is a variable cost.
question
When a perfectly competitive firm finds that its market price is below its minimum average variable cost, it will sell
answer
nothing at all; the firm shuts down.
question
If, for a given output level, a perfectly competitive firm's price is less than its average variable cost, then the firm
answer
Should shut down
question
A Nash equilibrium occurs when ________.
answer
none of the players can increase their payoffs by choosing a different strategy
question
To maintain a monopoly, a firm must have
answer
an insurmountable barrier to entry
question
What happens to the equilibrium wage and quantity of labor if output price rises?
answer
The equilibrium wage and the equilibrium quantity of labor rise.
question
In situations where new technologies are considered complementary to workers, demand for these workers will ________, resulting in ________ in the equilibrium wage.
answer
increase; an increase
question
Suppose the equilibrium price in a perfectly competitive industry is $15 and a firm in the industry charges $21. Which of the following will happen?
answer
The firm will not sell any output.
question
In long-run perfectly competitive equilibrium, which of the following is false?
answer
Firms earn economic profit.
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