In the 1970s a typical college student's consumption might be represented by the following items: a small used car, black and white television set, macaroni and cheese and generic brand beer
As many of these students graduated from college what do you expect happened to the composition and quantity of the goods mentioned? Explain.
In all likelihood the consumption of these items either dropped off dramatically or disappeared altogether. The reason is that these items are what economists would classify as inferior goods. As these college students graduated and started to earn more income their demand for these goods fell. It is likely that the composition of goods in their bundle would move towards more normal goods.
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Which of the following explains why talented major league baseball players command much higher salaries than neurosurgeons?
A) because it takes far more skill and training to be a major league baseball player than to be a neurosurgeon B) because the supply of talented major league baseball players is low relative to its demand compared to the supply of neurosurgeons. Therefore, adding another player yields far greater marginal benefit than adding another neurosurgeon. C) because the total value of baseball games is much higher than the total value of neurosurgery D) because the supply of talented major league baseball players is relatively low compared to the supply of neurosurgeons. Therefore, major league baseball players exert far more market power than neurosurgeons.
When a game is played repeatedly
A) only customers learn. B) customers and firms are both able to learn. C) firms end up colluding. D) a prisoner's dilemma will be the equilibrium.