econ final

A network effect arises whenever

a consumer's willingness to purchase a good or service is influenced by how many others also buy or have bought the item.

A firm that responds to a regulatory rule in a way that permits technical compliance while allowing the firm to violate the spirit of the regulation has.

engaged in a creative response to regulation.

If firms in a monopolistically competitive industry experience short-run losses

some firms exit the industry, causing the demand curves for the remaining firms to shift to the right until they earn a normal profit

If a union succeeds in forcing employers in a perfectly competitive product market to increase wages above the equilibrium level, then the level of unemployment

will increase

Legislation that makes it illegal to require union membership as a condition of continuing employment is the

collection of right-to-work laws.

In the above figure, if the monopolist engages in marginal cost pricing, what are its output and price?

1,200, $3

According to the above table, if the marginal revenue product is $24, how many workers will the profit maximizing monopsonist hire?

4

In the above table, if the marginal revenue product is $22, how many workers will the profit maximizing monopsonist hire and what wage will they pay each worker?

4; $16

Which of the following best describes the difference between cost-of-service regulation and rate-of-return regulation?

Costs determine prices in cost-of-service regulation and prices are set in rate-of-return regulation so the firm can make a normal rate of return.

The monopolistically competitive firm's economic profits tend toward zero in the long run. Why is this so?

In the long run, other firms will successfully offer substitutes for the profitable firm's product, and competition will eliminate economic profits.

feedback effect

Supply produces a good and sell it at a certain price. Demand think it's a too high price, thus they buy less of it. Supply realises that there is a lot of leftover, thus they reduce the price to reduce losses.

The president of the United States can obtain a court injunction that will stop a strike for an 80-day "cooling-off"period if the strike is expected to imperil national safety or health. This power is granted in the

Taft-Hartley Act

Over the past several decades, U.S. firms have faced more competition from overseas firms. Does this have any impact on the market power of U.S. oligopoly firms? 1

Yes, competition from overseas firms can substantially limit domestic firms' market power

If the producer of an information product engages in marginal cost pricing, it earns

an economic lost

A good that entails relatively high fixed costs and low marginal costs related to the use of knowledge and other information-intensive inputs as key factors of production is

an information product.

The existence of economies of scale is one reason oligopolies exist because

as output increases average total cost decreases leading to large-scale firms.

Some economists note the classic prisoner's dilemma as one of the first examples of strategic game theory. Refer to the above figure. The figure gives the payoff matrix for two individuals who are being accused of robbing a bank together. Which of the following is the outcome of the dominant strategy without cooperation?

both confess.

In a monopsonistic market,

both employment and wages are lower than in a comparable competitive market

Advertising is used by firms in a monopolistic competitive industry to

increase brand loyalty. differentiate their product from those of competitors. increase demands for their individual products ALL OF THE ABOVE

) The potential for asymmetric information to bring about a general decline in product quality in an industry is known as the ________ problem. 22)

lemons

One method unions use to ration available jobs among excess workers is

lengthy apprenticeships

The monopsonist will employ labor to the point at which the

marginal factor cost equals the marginal revenue product of labor.

Consider four types of markets: monopoly, perfect competition, oligopoly, and monopolistic competition. If they were ranked from the lowest number of firms to the largest number of firms the ranking would be:

monopoly, oligopoly, monopolistic competition, perfect competition.

When there is only one buyer of labor in a community, we talk of a

monopsony

Compared with a monopolist, the demand curve faced by a monopolistically competitive firm is

more elastic

Credit card companies that operate as intermediary firms between credit card holders and business vendors are best described as

platforms in a transaction-based market

Suppose that a regulatory agency has imposed marginal cost pricing on a natural monopolist. We expect that

the firm will eventually go out of business

Under the U.S. system of regulation, most regulars are selected from

the industry that is to be regulated.