101exam3akey

101exam3akey - Eco 101 830 Answer Key 1. C 2. A 3. C 4. D...

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Eco 101 830 Answer Key Exam 3 Form A 1. C 2. A 3. C 4. D 5. B 6. B 7. A 8. D 9. A 10. B 11. D 12. A 13. D 14. B 15. B 16. C 17. D 18. D 19. A 20. C 1. Monopolies are inefficient because the profit-maximizing output is too low relative to the efficient output. The result is a deadweight loss, which is a loss of consumer surplus not redistributed to producer profit. Monopolies are potentially beneficial in encouraging innovation and creativity (with patents and copyrights) and in the case of a natural monopoly with high fixed costs and large economies of scale, may be the most efficient solution. 2. a. The MP is the change in total product with each unit of labor: 10, 12, 10, 8, 8, 5, 4, 3; The MRP = MP x P = 20, 24, 20, 16, 16, 10, 8, 6 b. Firms hire as long as the MRP is > or = to the wage. At $7/hour the firm will hire up to 7 workers. The 8 th worker has a MRP = $6 which is less than the cost of $7 so the 8 th worker will not be hired. At $12/hour the firm will hire up to 5 workers. The 6 th
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