Compared to firms in a perfectly competitive market, a monopolist tends to:
Answer(s): A
Choice "a" is correct. Compared to firms in a perfectly competitive market, a monopolist tends to produce substantially less but charge a higher price.Choices "b", "c", and "d" are incorrect, per above Explanation.
Patents are granted in order to encourage firms to invest in the research and development of new products. Patents are an example of:
Answer(s): B
Choice "b" is correct. Patents are an example of entry barriers. Patents prevent other rival firms (without patents) from entering the market and consequently, are a form of entry barriers. Patents can be "process-related" or "product-related."Choices "a", "c", and "d" are incorrect, per above Explanation.
An oligopolist faces a "kinked" demand curve. This terminology indicates that:
Choice "a" is correct. In an oligopoly, each firm faces a "kinked" demand curve. Others will match price cuts, but ignore price increases. The "kink" is at the prevailing price. Best real world examples of oligopoly are the airline and auto industries.Choice "b" is incorrect. An oligopolist's demand curve is linear but "kinked." Above the "kink," demand is highly elastic. Below, very inelastic.Choice "c" is incorrect. An oligopolist cannot sell at any price. There is no "saturation point." Choice "d" is incorrect. A change in quantity demanded indicates a movement along the demand curve, not a shift in the curve.
An increase in the minimum wage:I). Will move employers down the labor demand curve, causing the quantity of labor demanded to fall.II). Is likely to increase the supply of labor, as more people will be willing to work for the higher wage.
Answer(s): D
Choice "d" is correct; neither statement I nor statement II are correct. Statement I is incorrect, as an increase in the minimum wage will move employers up, not down, the labor demand curve, causing the quantity of labor demanded to fall. Statement II is incorrect, as an increase in the minimum wage leads to a decrease in the quantity demanded of labor and an increase in the quantity supplied of labor. It does not increase the supply of labor, only the quantity supplied of labor.Choices "a", "b", and "c" are incorrect, per the above.
In a competitive market an increase in the minimum wage will likely have the following effects:
Answer(s): C
Choice "c" is correct. The general (or aggregate) demand for labor will remain unchanged; however, the quantity demanded will decrease.Choice "a" is incorrect, per for choice "c" above. Choices "b" and "d" are incorrect. The general (or aggregate) supply of labor will remain unchanged; however, the quantity supplied will increase.
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