Question

If the productivity of its workers increases, the firm
should:

		not change anything
		lay off some of these workers
		increase the wages of these workers
		decrease the wages of these workers

Check each of the following that are true concerning the factor demand for resources.

		marginal revenue product = (change in total revenue)/(change in input)
		marginal factor product = (change in total revenue)/(change in input)
		marginal factor cost = (change in input cost)/(change in quantity of inputs)
		capital and entrepreneurship are often substitutable
		if the price of capital decreases, ceteris paribus, more capital will be used along with less labor
		a decrease in costs results in an increase in Qd due to price sensitivity is called the output effect

Check all of the following that determine the elasticity of demand for monopolistic producers.

		the incomes of consumers
		demand for the unique products sold by monopolies
		the number of competing firms selling similar products
		customer perception of the similarity or uniqueness for the product or service.

Firms working together to set a market price and set market share is known as ___.

		Steven Manley's revenge
		product differentiation
		oligopolies
		none of these

Check all the following that lead to cost inefficiencies in monopoly.

		operating inefficiency
		costs of government regulation
		rent-seeking behavior
		competition with other firms
		income concentration
		charging at the lowest point of their ATC curve
		risk avoidance behavior

Answer 1

1. increase the wages of these workers
(Wages should be increased.)

2. marginal revenue product = (change in total revenue)/(change in input)
marginal factor cost = (change in input cost)/(change in quantity of inputs)
if the price of capital decreases, ceteris paribus, more capital will be used along with less labor
a decrease in costs results in an increase in Qd due to price sensitivity is called the output effect
(All these are true.)

3. the incomes of consumers
demand for the unique products sold by monopolies
the number of competing firms selling similar products
customer perception of the similarity or uniqueness for the product or service.
(All the options are correct.)

4. none of these
(None of the options are correct. Its a cartel.)

5. costs of government regulation
competition with other firms
charging at the lowest point of their ATC curve
(These lead to cost inefficiencies.)