TEST BANK for Economics Today: The Micro View, 20th Edition by Roger LeRoy Miller

Test Bank for Economics Today The Micro View, 20th Edition, 20e by Roger LeRoy Miller TEST BANK ISBN-13: 9780135887790 Full chapters included PART 1 Introduction 1 The Nature of Economics The Power of Economic Analysis AI—DECISION MAKING THROUGH DATA Microeconomic and Macroeconomic Applications The Three Basic Economic Questions and Two Opposing Sets of Answers The Economic Approach: Systematic Decisions EXAMPLE The Altered Incentives Confronting Prospective College Students BEHAVIORAL EXAMPLE Assessing Whether Charitable Donations Reflect Caring for Others or for Oneself Economics as a Science EXAMPLE Getting Directions WHAT HAPPENS WHEN . . . people’s actual reactions to incentives differ from how they claim they wo Positive versus Normative Economics ECONOMICS IN YOUR LIFE Government Involvement Enables a Private U.S. Housing Finance Company to Prov ISSUES & APPLICATIONS Why Fewer Men in Manufacturing Jobs Helps to Explain Why Fewer Women Are Marri What You Should Know PROBLEMS REFERENCES APPENDIX A Reading and Working with Graphs Direct and Inverse Relationships Constructing a Graph Graphing Numbers in a Table The Slope of a Line (A Linear Curve) What You Should Know Problems 2 Scarcity and the World of Trade‐Offs Scarcity Opportunity Cost, Trade-Offs, and Choices BEHAVIORAL EXAMPLE Why People with the Highest Hourly Opportunity Cost Allocate as Much Time to Leis EXAMPLE The Economic Explanation for Shrinking Airline Restrooms The Economic Choices a Nation’s People Face AI—DECISION MAKING THROUGH DATA City Management POLICY EXAMPLE City Bicycle Lanes Encounter the Law of Increasing Additional Cost Economic Growth, Production Possibilities, andthe Trade-Off between Present and Future WHAT HAPPENS WHEN . . . new companies can handle the wastewater by‐product from oil fracking at a Comparative Advantage and MaximizingYour Future Income ECONOMICS IN YOUR LIFE Extreme Specialization Leads One Person to Pursue Small‐Rocket Launches ISSUES & APPLICATIONS There Is No Such Thing as Free Parking What You Should Know PROBLEMS REFERENCES 3 Demand and Supply Demand EXAMPLE The Soaring Relative Price of Restaurant Meals EXAMPLE Assessing the Quality‐Adjusted Prices of Old and New Concert Violins BEHAVIORAL EXAMPLE Why Pay‐What‐You‐Want Pricing Often Pays Off for Charitable Organizations Shifts in Demand INTERNATIONAL EXAMPLE In China, Lower‐Priced Solar Energy Puts a Damper on the Demand for Coal AI—DECISION MAKING THROUGH DATA The Global Tourism Industry Supply Shifts in Supply EXAMPLE Technological Change Boosts Supply in the Jewelry Market WHAT HAPPENS WHEN . . . both sellers and buyers anticipate that the price of an item will increase i Putting Demand and Supply Together INTERNATIONAL EXAMPLE A British Vegetable Shortage Has Predictable Effects on Vegetable Prices ECONOMICS IN YOUR LIFE Space‐Constrained Restaurants Discover That Customers Care about Quality‐ ISSUES & APPLICATIONS Explaining a Consumption Shift from Soft Drinks to Bottled Water: Tastes versu What You Should Know PROBLEMS REFERENCES 4 Extensions of Demand and Supply Analysis The Price System and Markets AI—DECISION MAKING THROUGH DATA Transaction Costs and “Price Stickiness” Changes in Demand and Supply EXAMPLE The Effects of a Simultaneous Decrease in the Supply of and an Increase in the Demand for Vi The Rationing Function of Prices INTERNATIONAL EXAMPLE Customers of eWater Prefer Price Rationing over First Come, First Served at a Price Ceilings WHAT HAPPENS WHEN . . . the New York City government effectively raises the legal minimum price of c Price Floors and Quantity Restrictions EXAMPLE “99‐Seat Theaters” in Los Angeles Adapt to a Minimum Wage Requirement BEHAVIORAL EXAMPLE Experimental Evidence Verifies Predictions about the Effects of Imposing a Price ECONOMICS IN YOUR LIFE A Mayor Favors the Minimum Wage until Confronting Its Consequences ISSUES & APPLICATIONS Why Shortages of Some Pharmaceuticals Generate Higher Prices for Other Drugs What You Should Know PROBLEMS REFERENCES APPENDIX B Consumer Surplus, Producer Surplus, and Gains from Trade within a Price System Consumer Surplus Producer Surplus Gains from Trade within a Price System Price Controls and Gains from Trade 5 Public Spending and Public Choice Market Failures and Externalities EXAMPLE Neighbors Are Not Hog Wild about a North Carolina Pig Farm WHAT HAPPENS WHEN . . . governments require everyone to purchase health insurance? The Other Economic Functions of Government AI—DECISION MAKING THROUGH DATA Contemplating Big Data as a Public Good The Political Functions of Government POLICY EXAMPLE Government Sponsorship Keeps Light Rail Systems in Operation BEHAVIORAL EXAMPLE To Inhibit Nicotine Consumption, Should the Government Assume That All Consumers Public Spending and Transfer Programs Collective Decision Making: The Theory of Public Choice POLICY EXAMPLE Private Space Firms Recycle Rocket Boosters and Capsules That the Government Regards ECONOMICS IN YOUR LIFE Fake “Service Pets” Create External Costs on Airline Flights ISSUES & APPLICATIONS Residents of Wisconsin Learn That Services Provided by State Parks Are Not Pub What You Should Know PROBLEMS REFERENCES 6 Funding the Public Sector Paying for the Public Sector: Systems of Taxation POLICY EXAMPLE State Governments Confront Higher Debt Repayment Expenses AI—DECISION MAKING THROUGH DATA Preserving National Tax Bases EXAMPLE Average Federal Income Tax Rates and U.S. Income Tax Progressivity The Most Important Federal Taxes WHAT HAPPENS WHEN . . . the government raises the tax rate on capital gains derived from sales of fi Tax Rates and Tax Revenues POLICY EXAMPLE If You Generate Sales from Moving Items from Our State to Outer Space, Pay Up! BEHAVIORAL EXAMPLE Increases in Complex Sales Taxes Generate Predictable Dynamic Responses by Consum Taxation from the Point of View of Producersand Consumers ECONOMICS IN YOUR LIFE The Connecticut Government Decides to Avoid Striking Out on Its Income Tax Po ISSUES & APPLICATIONS What Would It Take to Save Social Security as We Know It? What You Should Know PROBLEMS REFERENCES PART 5 Dimensions of Microeconomics 19 Demand and Supply Elasticity Price Elasticity EXAMPLE The Price Elasticity of Demand for Freshman Enrollments at Private Colleges INTERNATIONAL POLICY EXAMPLE The Price Elasticity of Demand for Tesla Vehicles in Hong Kong WHAT HAPPENS WHEN . . . a government requires firms to collect a per‐unit tax on sales of a produc Elasticity and Total Revenues AI—DECISION MAKING THROUGH DATA In the Pursuit of “Price Optimization” Determinants of the Price Elasticity of Demand The Cross Price and Income Elasticities of Demand Price Elasticity of Supply BEHAVIORAL EXAMPLE Getting Paid to Work Out ECONOMICS IN YOUR LIFE Imposing a Philadelphia Soft Drinks Tax Reveals Information about the Price E ISSUES & APPLICATIONS Tax‐Induced Increases in Airline Ticket Prices, the Price Elasticity of Dema What You Should Know PROBLEMS REFERENCES 20 Consumer Choice Utility Theory WHAT HAPPENS WHEN . . . consuming an additional unit of a good or service leaves total utility uncha BEHAVIORAL EXAMPLE Rational Rationing of Calories to Prevent Negative Marginal Utility from Food Con Optimizing Consumption Choices AI—DECISION MAKING THROUGH DATA An Aid for Attaining a Consumer Optimum EXAMPLE Why a Consumer Optimum Can Encompass a $100 Plain White Cotton T‐Shirt How a Price Change Affects Consumer Optimum Behavioral Economics and Consumer Choice Theory ECONOMICS IN YOUR LIFE Boutique Sellers Offer $2,000 Japanese‐Made Jeans That Some Consumers Truly ISSUES & APPLICATIONS How Much “Intermittently Functioning” High‐Tech Automotive Gadgetry Fits What You Should Know PROBLEMS REFERENCES APPENDIX F More Advanced Consumer Choice Theory On Being Indifferent The Budget Constraint and the Consumer Optimum Deriving the Demand Curve 21 Rents, Profits, and the Financial Environment of Business Economic Rent Firms and Profits WHAT HAPPENS WHEN . . . factors of production that a producer already owns could be leased to other Interest POLICY EXAMPLE State Governments Discover That a Change in the Interest Rate Affects Discounted Pres Corporate Financing Methods INTERNATIONAL POLICY EXAMPLE A Government Bond Designed for a Generation of Smartphone Users AI—DECISION MAKING THROUGH DATA Supplementing or Replacing Human Financial Trading EXAMPLE Why Trying to Induce Companies to “Do the Right Thing” by “Punishing” Their Stocks O ECONOMICS IN YOUR LIFE What New Microwave Towers Have to Do with Modern Financial Markets ISSUES & APPLICATIONS Explaining the Growth in the Number of Widely Used “Stock Indexes” What You Should Know PROBLEMS REFERENCES PART 6 Market Structure, Resource Allocation, and Regulation 22 The Firm: Cost and Output Determination Short Run Versus Long Run A Firm’s Production EXAMPLE A Railroad Company Rediscovers How to Obtain Maximum Feasible Production from Available Inpu Short-Run Costs to the Firm EXAMPLE Airline Companies Hope to Reduce Their Total Costs at the Expense of Higher Total Fixed Cost AI—DECISION MAKING THROUGH DATA Using Augmented Reality WHAT HAPPENS WHEN . . . total fixed cost increases at a firm? Long-Run Cost Curves INTERNATIONAL POLICY EXAMPLE Government Policies May Ensure Economies of Scale for a Chinese Battery EXAMPLE Long‐Haul Trucking Firms Seek to Attain a Minimum Efficient Scale Encompassing “Last‐M ECONOMICS IN YOUR LIFE Returning to the Days of Sailing Ships with High‐Tech Wind Cylinders ISSUES & APPLICATIONS Retailers Employ AI and Robots in Pursuit of Economies of Scale What You Should Know PROBLEMS REFERENCES 23 Perfect Competition Characteristics of a Perfectly CompetitiveMarket Structure AI—DECISION MAKING THROUGH DATA Accessing All Relevant Information for “Dynamic Pricing” Profit-Maximizing Choices of a Perfectly Competitive Firm Short-Run Supply under Perfect Competition WHAT HAPPENS WHEN . . . a new regulation causes the marginal cost curve and, hence, the average tota Price Determination under Perfect Competition The Long-Run Industry Situation: Exit and Entry INTERNATIONAL EXAMPLE Reallocating Quarters and Deck Space Transforms Ocean Freighters into Partial EXAMPLE Assessing the Long‐Run Industry Supply Curve in the Growing Third‐Party Food Delivery In ECONOMICS IN YOUR LIFE For Urban Farmers, Industry Entry May Be Relatively Unimpeded but Still Entai ISSUES & APPLICATIONS Higher Minimum Wage Rates and Long‐Run Equilibrium in the Restaurant Industr What You Should Know PROBLEMS REFERENCES 24 Monopoly Defining and Explaining the Existence of Monopoly POLICY EXAMPLE Chicago’s Licensing Barriers to Entry Limit Consumers’ Access to Mobile Food Trea The Demand Curve a Monopolist Faces Costs and Monopoly Profit Maximization WHAT HAPPENS WHEN . . . the demand curve faced by a monopolist shifts rightward and the monopolist w AI—DECISION MAKING THROUGH DATA Using “Dynamic Clustering Analysis” to Maximize Profits On Making Higher Profits: Price Discrimination AI—DECISION MAKING THROUGH DATA Price Discrimination via “Personalized Pricing” The Social Cost of Monopolies ECONOMICS IN YOUR LIFE So, You Want to Provide Dietary Advice in Florida? Get a License! ISSUES & APPLICATIONS The Unraveling of Taxicab Monopolies What You Should Know PROBLEMS REFERENCES APPENDIX G Consumer Surplus and the Deadweight Loss Resulting from Monopoly Consumer Surplus in a Perfectly Competitive Market How Society Loses from Monopoly 25 Monopolistic Competition Monopolistic Competition EXAMPLE A New Wave of Product Differentiation Sweeps the Movie Theater Industry BEHAVIORAL EXAMPLE Why Physicians in Norway Behave Differently While Working in Second Jobs at Priva Price and Output for the Monopolistic Competitor AI—DECISION MAKING THROUGH DATA Analysis of Billions of Prices Brand Names and Advertising Information Products and Monopolistic Competition WHAT HAPPENS WHEN . . . an author who independently sells an information product—a self‐help e ECONOMICS IN YOUR LIFE Cruise Ships Turn to “Star Fleet” and Other Themes to Differentiate Their ISSUES & APPLICATIONS U.S. Industries That Differentiate Their Products via Digital Advertising What You Should Know PROBLEMS REFERENCES 26 Oligopoly and Strategic Behavior Oligopoly Measuring Industry Concentration INTERNATIONAL EXAMPLE The Four‐Firm Concentration Ratio in the Global Tire Industry EXAMPLE The HHI for the U.S. Airline Industry Strategic Behavior and Game Theory BEHAVIORAL EXAMPLE Success in Game Theory Does Not Necessarily Require Complex Thinking The Cooperative Game: A Collusive Cartel WHAT HAPPENS WHEN . . . the market demand curve shifts leftward in an industry with a cartel whose m Network Effects and Two-Sided Markets AI—DECISION MAKING THROUGH DATA Developing a New Source of Industry Concentration ECONOMICS IN YOUR LIFE Searching for Cosmetics Products with Network Effects ISSUES & APPLICATIONS Why Platform Firms Must Balance Getting More Customers vis‐À‐vis Getting What You Should Know PROBLEMS REFERENCES 27 Regulation and Antitrust Policy in a Globalized Economy Forms of Industry Regulation Regulating Natural Monopolies WHAT HAPPENS WHEN . . . a natural monopoly subject to a regulatory requirement to utilize average co POLICY EXAMPLE California Seeks to Reduce Homeowners’ Energy Costs at the Expense of Higher House Regulating Nonmonopolistic Industries AI—DECISION MAKING THROUGH DATA Applying a Human Regulatory Touch to Firms’ AI Systems Incentives and Costs of Regulation BEHAVIORAL EXAMPLE Regulatory Nudges Predicated on Paternalistic Lies POLICY EXAMPLE Cost‐of‐Service Regulation of the U.S. Health Insurance Industry Fails to Contain Antitrust Policy INTERNATIONAL POLICY EXAMPLE Relevant Illegal Competition Complicates Merger Evaluations in Latin Am ECONOMICS IN YOUR LIFE When a Regulation Requiring the Label “Added Sugars” Actually Means Nothi ISSUES & APPLICATIONS How Have FDA Regulatory Rules Dramatically Pushed Up Prices of Old Drugs That What You Should Know PROBLEMS REFERENCES PART 7 Labor Resources and the Environment 28 The Labor Market The Demand for Labor in a Perfectly CompetitiveLabor Market INTERNATIONAL EXAMPLE A Newly Derived Demand for German Coal Mines Relates to Energy but Not to Coal Wage Determination in a Perfectly Competitive Labor Market Labor Demand of a Monopolist and Overall Input Utilization EXAMPLE Someday, You May Purchase a Largely Robot‐Constructed House Monopsony: A Buyer’s Monopoly AI—DECISION MAKING THROUGH DATA Monopsonistic Decisions for Hiring Service Providers Labor Unions POLICY EXAMPLE In Twenty‐Eight U.S. States, “Right to Work” Means No Mandatory Union “Dues ECONOMICS IN YOUR LIFE Why Tennis Clubs Are Replacing Human Line Judges with Robots ISSUES & APPLICATIONS Video Games, U.S. Labor Supply, and Equilibrium Employment and Wages What You Should Know PROBLEMS REFERENCES 29 Income, Poverty, and Health Care The Distribution of Income WHAT HAPPENS WHEN . . . a nation’s Lorenz curve becomes less bowed away from the 45‐degree line? EXAMPLE Why a Rise in U.S. Wealth Inequality Can Be Blamed in Part on Aging “Baby Boomers” Determinants of Income Differences BEHAVIORAL EXAMPLE The Lasting Positive Effect on Lifetime Earnings of Childhood Access to Books and Poverty and Attempts to Eliminate It POLICY EXAMPLE The Unavoidable Implications of Some Basic Social Security Arithmetic Health Care AI—DECISION MAKING THROUGH DATA Reducing Repetitive Health Care Services ECONOMICS IN YOUR LIFE Targeting In‐Kind Care in Government Health Programs ISSUES & APPLICATIONS The Effective Marginal Tax Rate Faced by Beneficiaries of Anti‐Poverty Progr What You Should Know PROBLEMS REFERENCES 30 Environmental Economics Private versus Social Costs WHAT HAPPENS WHEN . . . a nation’s government imposes a uniform pollution tax even though the econ Pollution INTERNATIONAL POLICY EXAMPLE A Potentially High Marginal Cost of Plastic‐Pollution Abatement in Ke Reducing Humanity’s Carbon Footprint: Restraining Spillovers AI—DECISION MAKING THROUGH DATA Managing Decisions Within the European Emissions Trading System Common Property and Wild Species BEHAVIORAL EXAMPLE Common Property, the “Paradox of Plenty,” and Gains from Assigning Resource P INTERNATIONAL POLICY EXAMPLE Could South African Rhino Poaching Be Stopped by Legalizing Trade in Rh ECONOMICS IN YOUR LIFE Removing Individual Trees from View to Ensure Seeing the Forest ISSUES & APPLICATIONS European Authorities Restrain the Supply of Emissions Allowances to Push Up Th What You Should Know PROBLEMS REFERENCES PART 8 Global Economics 31 Comparative Advantage and the Open Economy Why We Trade: Comparative Advantage and Mutual Gains from Exchange AI—DECISION MAKING THROUGH DATA Reshaping International Trade Flows INTERNATIONAL EXAMPLE Gains from Agricultural Specialization and Trade Conquer Distance EXAMPLE Shipping Containers and International Trade Arguments against Free Trade Ways to Restrict Foreign Trade WHAT HAPPENS WHEN . . . a nation’s government reduces an existing quota limit on foreign imports o INTERNATIONAL POLICY EXAMPLE Identifying Who Loses Out as a Consequence of Asian Tariffs on Rice Imp International Trade Organizations ECONOMICS IN YOUR LIFE A Potential Shift of Comparative Advantage in Olive Oil Production toward the ISSUES & APPLICATIONS What Do Countries Gain from Involvement in Regional Trade Agreements? What You Should Know PROBLEMS REFERENCES 32 Exchange Rates and the Balance of Payments The Balance of Payments and InternationalFinancial Flows WHAT HAPPENS WHEN . . . U.S. spending on merchandise imports increases during the same year that for Deriving the Demand for and Supply of Foreign Exchange INTERNATIONAL EXAMPLE The Non‐U.S. Derived Demand for and Supply of U.S. Dollars Determining Foreign Exchange Rates Fixed Versus Floating Exchange Rates