(Table: Competitive Firm) The marginal revenue for the fifth unit of output is:
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$90
Sometimes, buffets charge an "early bird" price before the dinner rush which is
cheaper than normal. This is because the demand for meals during the "early bird"
,time is
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more elastic
When there is a surplus, sellers have an incentive to ______ their price and buyers have
an incentive to offer a ______ price.
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decrease; lower
When demand is inelastic, revenues increase and production costs decrease as the
quantity produced declines; total profits will always increase with a higher price.
Therefore, monopolists:
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will always raise their price until they get to an elastic portion of the
demand curve.
If price controls are so harmful, why would a country ever impose them?
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, Politicians have strong incentives to respond to public opinion with price
controls when prices increase sharply.
(Table: Two Factories) If the firm in this table faces a market price of $3.00, how many
units of output should it produce in each factory?
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3 units in Factory 1 and 6 units in Factory 2
Which of the following statements is TRUE?
I. A $0.50 tax on each fishing lure sold raises the price per lure by $0.50.
II. A tax on sellers is equivalent to a tax on buyers.
III. A tax on buyers is analyzed by shifting the demand curve up by the amount of the
tax.
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II only
Karl values Word at $100 and Excel at $40, and Adam values Word at $20 and Excel at
$90. How much more does the seller make if it bundles than if it sells the products
individually?
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, $30
Jack and Jill work at a bakery. In 1 hour, Jack can decorate either five ice-cream cakes
or two wedding cakes. In 1 hour, Jill can decorate either four ice-cream cakes or one
wedding cake. Thus, the opportunity cost of decorating an ice-cream cake is _____ for
Jack and _____ for Jill.
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2/5 wedding cake; 1/4 wedding cake
The Gillette Fusion razor sells for approximately $10.00, and a four-set of replacement
blades sells for over $8. Which of the following statements is TRUE?
I. Consumers with a high willingness to pay for being clean-shaven will buy many
replacement blades.
II. Consumers with a low willingness to pay for being clean-shaven will rarely buy
replacement blades.
III. Gillette's high price for the replacement blades is a method to extract consumer
surplus from those consumers with a high desire to be clean-shaven.
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I, II, and III
Which of the following events will cause a decrease in the equilibrium price?
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$90
Sometimes, buffets charge an "early bird" price before the dinner rush which is
cheaper than normal. This is because the demand for meals during the "early bird"
,time is
Give this one a try later!
more elastic
When there is a surplus, sellers have an incentive to ______ their price and buyers have
an incentive to offer a ______ price.
Give this one a try later!
decrease; lower
When demand is inelastic, revenues increase and production costs decrease as the
quantity produced declines; total profits will always increase with a higher price.
Therefore, monopolists:
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will always raise their price until they get to an elastic portion of the
demand curve.
If price controls are so harmful, why would a country ever impose them?
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, Politicians have strong incentives to respond to public opinion with price
controls when prices increase sharply.
(Table: Two Factories) If the firm in this table faces a market price of $3.00, how many
units of output should it produce in each factory?
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3 units in Factory 1 and 6 units in Factory 2
Which of the following statements is TRUE?
I. A $0.50 tax on each fishing lure sold raises the price per lure by $0.50.
II. A tax on sellers is equivalent to a tax on buyers.
III. A tax on buyers is analyzed by shifting the demand curve up by the amount of the
tax.
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II only
Karl values Word at $100 and Excel at $40, and Adam values Word at $20 and Excel at
$90. How much more does the seller make if it bundles than if it sells the products
individually?
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, $30
Jack and Jill work at a bakery. In 1 hour, Jack can decorate either five ice-cream cakes
or two wedding cakes. In 1 hour, Jill can decorate either four ice-cream cakes or one
wedding cake. Thus, the opportunity cost of decorating an ice-cream cake is _____ for
Jack and _____ for Jill.
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2/5 wedding cake; 1/4 wedding cake
The Gillette Fusion razor sells for approximately $10.00, and a four-set of replacement
blades sells for over $8. Which of the following statements is TRUE?
I. Consumers with a high willingness to pay for being clean-shaven will buy many
replacement blades.
II. Consumers with a low willingness to pay for being clean-shaven will rarely buy
replacement blades.
III. Gillette's high price for the replacement blades is a method to extract consumer
surplus from those consumers with a high desire to be clean-shaven.
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I, II, and III
Which of the following events will cause a decrease in the equilibrium price?
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