A new coffee shop opens and to maximize profit it hires 5 workers at the competitive wage rate. The price of a cup of coffee is $4 and the value of marginal product of workers in the coffee shop is$12 an hour.

If the price of a cup of coffee rises from $4 to$5 and the coffee shop continues to hire workers at the competitive wage rate, explain how the value of marginal product and the number of workers hired will change.

Which of the following statements is incorrect. In oligopoly, ________.

A. barriers to entry prevent new firms entering

B. each firm’s profit is influenced by each other firms’ advertising

C. each firm’s action is influenced by the actions and reactions of each other firm

D. each firm is a price taker and the price is the monopoly profit-maximizing price

In the prisoners’ dilemma game, each player ________.

A. consults the other player to determine his best action B. chooses the best outcome for the other player C. chooses the best outcome for himself D. chooses the best outcome for both players together

Does the Fed face a tradeoff in the short run? Explain why or why not. Use the following information to work Problems 6 to 9. Figure 1 shows the aggregate demand curve, AD, and the short-run aggregate supply curve, AS, in the economy of Freezone. Potential GDP is $300 billion.

Read Eye on Cell Phones and explain why cell-phone producers offer such a large variety of their products. Draw a graph of a firm’s cost and revenue curves if all cell phones are identical. Use your graph to illustrate the effects of the firm introducing a new, differentiated cell phone.

Discretionary fiscal policy will stabilize the economy most when:

a) deficits are incurred during recessions and surpluses during inflation.

b) the budget is balanced each year.

c) deficits are incurred during inflation and surpluses during recessions.

d) budget surpluses are continuously incurred.

In a competitive labor market for bakers, the equilibrium wage rate ________. A. rises if bakers become more productive B. falls if the supply of bakers decreases C. rises if the market price of bakery items falls D. rises if new technology makes it easier for anyone to be a baker

An individual’s supply of labor curve is ________. A. horizontal at the market wage rate B. upward sloping as the wage rate rises C. upward sloping at low wage rates but becomes downward sloping at high wage rates D. vertical at the standard number of hours a person works per day

Which of the following statements about parasitism is true? a. The presence of a parasite does not affect the host. b. Parasitism is a cooperative relationship between two species. c. Parasites always kill their hosts. d. Parasitism is similar to predation.

If your college switched to online delivery of its courses, what changes do you predict would occur in the factor markets in the town where your college is located

If your college switched to online delivery of its courses, what changes do you predict would occur in the factor markets in the town where your college is located

The value of marginal product of labor increases if ________. A. more labor is hired B. more of the good is produced C. the market price of the good produced rises D. using a new technology reduces the demand for labor

In the years after World War II, the birth rate increased and the so-called baby boom generation was created. That generation is now beginning to retire. Draw a demand-supply graph to illustrate the effects of this increase in the number of seniors on the market for medical services.

Through the 1990s, the percentage of high school students who decided to go to college increased. Draw a demand-supply graph to illustrate the effect of this increase on the market for college graduates. Explain its effect on the market for college professors.