econ final- study guide mod 10-11

d. All of the answers above are correct.

3. Assume consumer demand for CD-ROMs increases. The result is a (an): a. increase in derived demand for workers in the CD-ROM industry. b. increase in the marginal revenue product of firms in the CD-ROM industry. c. rightward shift in the market demand for labor curve in the CD-ROM industry. d. All of the answers above are correct. e. None of the answers above are correct.

Clayton Antitrust Act

A 1914 amendment that strengthens the Sherman Act by making it illegal for firms to engage in certain anticompetitive business practices is called the____________

Robinson-Patman Act

A 1936 amendment to the Clayton Act that strengthens the Clayton Act against price discrimination is called__________

trust

A _______________is a combination or cartel consisting of firms that place their assets in the custody of a board of trustees.

e. Clayton Act.

A firm that acquires the stock of a competing firm and there is a substantial lessening of competition, would be in violation of the: a. Robinson-Patman Act. b. Sherman Antitrust Act. c. Federal Trade Commission Act. d. Interstate Commerce Act. e. Clayton Act.

a. derived demand.

A firm's demand for labor depends on, in part, the demand for the firm's product. To summarize this idea, economists say that the demand for labor is: a. derived demand. b. marginal demand. c. secondary demand. d. monopsonistic demand.

Monoposony

A labor market in which a single firm hires labor is called a_________

conglomerate merger

A merger between firms in unrelated markets is called a____________

vertical merger

A merger of a firm with its suppliers is called a_________

horizontal merger

A merger of firms that compete in the same market is called a______

c. less than $150 per day.

A monoposony owner believes that hiring an additional worker would increase the company's revenue by $150 per day. We can conclude that the monopsony pays its workers: a. more than $150 per day. b. exactly $150 per day. c. less than $150 per day. d.exactly $75 per day.

c. marginal factor cost of labor.

A monopsonist hires the amount of labor where the marginal revenue product of laborequals the: a. price of the monosonist's product. b. wage rate. c. marginal factor cost of labor. d. marginal product of labor.

c. decrease the factor price to hire more.

A monopsonist's marginal factor cost (MFC) curve lies above its supply curve because the firm must: a. lower the product price to sell more. b. increase the price of its product to sell more. c. decrease the factor price to hire more. d. lower the factor price to hire more. e. None of the answers above are correct.

a. Where marginal revenue product equals marginal factor cost.

A profit-maximizing monopsonist will set the quantity of labor it will employ based on which of the following conditions? a. Where marginal revenue product equals marginal factor cost. b. Where marginal product equals marginal revenue. c. Where marginal product equals marginal factor cost. d. Where marginal revenue product equals the competitive market wage.

marginal cost pricing

A system of pricing in which the price charged equals the marginal cost of the last unit produced is called__________

b. $5,000.

Assume Ajax Company employs 100 workers and total revenue is $400,000. When Ajax Company employs 101 workers, total revenue is $405,000. The marginal revenue product of the 101st workers is: a. $40,000. b. $5,000. c. $405,000. d. None of the answers above are correct.

derived demand

Changes in consumer demand for a product cause changes in demand for labor and other resources used to make the product. This concept is called__________

c. trust.

Firms that place their assets in the custody of a board of trustees is called a: a. utility. b. oligopoly. c. trust. d. None of the answers above are correct. e. All of the answers above are correct.

c. greater than the wage rate.

For a monopsonist, the marginal factor cost is always: a. equal to the wage rate. b. less than the wage rate. c. greater than the wage rate. d. the same as the labor supply. e. the same as the labor demand.

b. $14.

Lorna's Lumberyard is a monopsony. Lorna estimates that at a wage of $10, 100 workers would be willing to work for her. Similarly, at a wage of $12, 200 workers would be willing to work. Her marginal factor cost is: a. $10. b. $14. c. $120. d. $140. e. $240.

d. None of the answers above are correct.

One reason the supply of carpenters is greater than the supply of physicians is because: a. physicians do not belong to a union. b. carpenters demand less income. c. carpenters belong to unions. d. None of the answers above ared correct. e. All of the answers above are correct.

d. Clayton Act.

Price discrimination that tends to lessen competition is outlawed by the: a. Interstate Commerce Act. b. Federal Trade Commission Act. c. Sherman Act. d. Clayton Act.

e. None of the answers above are correct.

Suppose a change in technology increases the marginal product of labor. The result is a (an): a. leftward shift in the demand for labor curve. b. rightward shift in the supply of labor curve. c. downward movement along the demand for labor curve. d. upward movement along the demand for labor curve. e. None of the answers above are correct.

e. Robinson-Patman Act.

Suppose a firm offers quantity discounts or special promotional allowances only to favored distributors, and the effect is to substantially lessen competition. This firm would be in violation of the: a. Celler-Kefauver Act. b. Sherman Antitrust Act. c. Federal Trade Commission Act. d. Clayton Act. e. Robinson-Patman Act.

false

TF A monopsonist will hire more workers than will be hired in a competitive labor market.

false

TF An improvement in technology that increases the marginal product will shift the demand for labor curve to the left.

true

TF An increase in the demand for a product will shift the demand curve for labor producing the product to the right.

false

TF Antitrust laws in other countries are much stronger than U.S. antitrust laws.

false

TF If a monopsonist's labor supply curve is positively sloped, the marginal factor cost (MFC) will be below the wage rate.

true

TF In a competitive labor market, marginal revenue product equals marginal product times the product price.

false

TF In a competitive labor market, the demand for labor X that produces product Y will decrease if the demand for product Y increases.

true

TF Interlocking directorates are illegal under the Clayton Act whether or not the effect is to lessen competition substantially.

false

TF Marginal revenue product measures the addition to total revenue from selling an additional unit of a product.

false

TF Monopsony means a product market with single buyer

false

TF One of the least economically effective ways to reduce poverty over time is through investment in human capital.

false

TF The Robinson-Patman Act strengthened the merger provisions of the Clayton Act.

false

TF The Sherman Antitrust Act outlawed tying contracts.

true

TF The Utah Pie case is an example of a violation of the Robinson-Patman Act.

true

TF The per se rule was applied in the Alcoa case.

false

TF The purchase of Michelin Tire Company by General Motors is an example of a horizontal merger.

false

TF Under an exclusive buying arrangement, a retailer agrees to sell a good at the manufacturer's suggested retail price.

e. railroads.

The Interstate Commerce Commission (ICC) was established in 1887 to regulate: a. interstate sales of food and drugs. b. water transportation. c. nationwide advertising. d. banking. e. railroads.

Sherman Antitrust Act

The ___________is the federal antitrust law enacted in 1890 that prohibits monopolization and conspiracies to restrain trade.

human capital

The accumulated investment people make in education, training, experience, and health to make themselves more productive is called____________

marginal factor cost

The additional total cost resulting from a one-unit increase in the quantity of a factor is called___________

rule of reason

The antitrust doctrine that the existence of monopoly alone is not illegal unless the monopoly engages in illegal business practices is called the___________

e. Sherman Antitrust Act.

The antitrust law that prohibits firms from combining or conspiring to restrain trade in interstate commerce is the: a. Robinson-Patman Act. b. Clayton Act. c. Celler-Kefauver Act. d. Federal Trade Commission Act. e. Sherman Antitrust Act.

a. the marginal revenue product equals the marginal factor cost.

The best number of workers for any employer to hire is that quantity in which: a. the marginal revenue product equals the marginal factor cost. b. the marginal revenue product exceeds the marginal factor cost. c. total costs are minimized. d. total revenue is maximized. e. None of the answers above are correct.

a. set up an independent agency with the power to investigate and bring antitrust court cases.

The importance of the Federal Trade Commission Act of 1914 is that it: a. set up an independent agency with the power to investigate and bring antitrust court cases. b. strengthened the law against mergers. c. strengthened the law against price discrimination. d. All of the answers above are correct.

d. The Alcoa case.

The per se rule applied in which of the following cases? a. The Utah Pie case. b. The Standard Oil case. c. The MIT case. d. The Alcoa case.

predatory pricing

The practice of one or more firms temporarily reducing prices in order to eliminate competition and then raising prices is called _____________

d. All of the answers above are correct.

The rule of reason was applied in which of the following cases? a. American Tobacco Trust case. b. U.S. Steel case. c. Standard Oil case. d. All of the answers above are correct. e. None of the answers above are correct.

per se rule

The_________ is the antitrust doctrine that the existence of monopoly alone is illegal, regardless of whether or not the monopoly engages in illegal business practices.

Celler-Kefauver Act

The__________ is a 1950 amendment to the Clayton Act that prohibits one firm from merging with a competitor by purchasing its physical assets if the effect is to substantially lessen competition.

demand curve for labor

The___________ is the curve showing the different quantities of labor a firm is willing to hire at different prices of labor.

Federal Trade Commission act

The______________ is the federal act that in 1914 established the Federal Trade Commission (FTC) to investigate unfair competitive practices of firms

supply curve of labor

The_____________is the curve showing the different quantities of workers willing to work at different prices of labor.

b. illegal if they could be shown to lessen competition.

Under the Clayton Act, horizontal mergers by stock acquisition were: a. not considered. b. illegal if they could be shown to lessen competition. c. illegal under any circumstances. d. legal if they could be shown to lessen competition.

d. interlocking directorates

Under the Clayton Act, which of the following was illegal, even if it was shown not to lessen competition substantially: a. price discrimination. b. tying contracts. c. horizontal mergers by stock acquisition. d. interlocking directorates

d. revenue product.

When a firm hires an additional unit of labor, the increase in a firm's total revenues is known as the marginal: a. cost. b. product. c. utility product. d. revenue product.

b. Clayton Act of 1914.

Which antitrust act prohibits exclusive dealing, tying contracts, stock acquisitions, and interlocking directorates? a. Sherman Act of 1890. b. Clayton Act of 1914. c. Federal Trade Commission Act of 1914. d. Robinson-Patman Act of 1936.e. Celler-Kefauver Act of 1950.

a. Sherman Act of 1890

Which antitrust act prohibits price fixing and other conspiracies and combinations that restrain trade and attempts to monopolize? a. Sherman Act of 1890 b. Clayton Act of 1914 c. Federal Trade Commission Act of 1914 d. Robinson-Patman Act of 1936e. Celler-Kefauver Act of 1950

c. The Robinson-Patman Act.

Which of the following deals most centrally with price discrimination? a. The Sherman Act. b. The Clayton Act. c. The Robinson-Patman Act. d. All of the answers above are correct.

a. The seller of one product requires the buyer to purchase some other product (s).

Which of the following describes a tying contract? a. The seller of one product requires the buyer to purchase some other product (s). b. One firm buys the stock of a competing firm. c. The directors of one company serve on the board of directors of another company in the same industry. d. An agreement between a manufacturer and a retailer based on the condition that the retailer is not to carry any rival products of the manufacturer.

d. All of the answers above are correct.

Which of the following involved deregulation? a. Motor Carrier Act of 1982. b. Staggers Rail Act of 1980. c. Airline Deregulation Act of 1978. d. All of the answers above are correct.

b. The additions to total cost resulting from a one-unit increase in the quantity of a variable factor employed (ex: labor).

Which of the following is the marginal factor cost of a monopsony? a. The competitive market wage rate when there is a monopsony. b. The additions to total cost resulting from a one-unit increase in the quantity of a variable factor employed (ex: labor). c. Total cost divided by total labor employed. d. None of the answers above are correct.

b. A vertical merge

Which of the following mergers would result from the purchase of a paper mill by a textbook publishing company? a. An interlocking merger. b. A vertical merger. c. A conglomerate merger. d. A horizontal merger.

d. None of the answers above are correct.

Which of the following statements concerning the supply of labor is true? a. The supply of labor is determined by the prevailing wage rate. b. The labor supply curve is downward sloping. c. The wage rate has no effect on the supply of labor. d. None of the answers above are correct.

a. A monoposony is the only employer of a factor of production.

Which of the following statements is true? a. A monoposony is the only employer of a factor of production. b. A monoposony will pay workers a higher wage and employ fewer workers than a competitive labor market. c. A monoposony has a marginal factor cost curve which lies below its supply curve of labor. d. Unions are becoming a greater influence in American labor markets. e. All of the answers above are correct.

c. Government regulation of a natural monopoly is economically justifiable.

Which of the following statements is true? a. A vertical merger is a merger of firms that compete in the same market. b. The rule of reason doctrine declares that the existence of monopoly alone is illegal. c. Government regulation of a natural monopoly is economically justifiable. d. Deficient information on unsafe products causes underconsumption.

d. All of the answers above are correct.

Which of the following statements is true? a. Derived demand for labor depends on the demand for the product labor produces. b. Unions may increase demand or decrease the supply of labor. c. Investment in human capital is expected to increase the demand for those workers. d. All of the answers above are correct.

b. Marginal factor cost is the extra cost to a firm of employing one more unit of a factor of production.

Which of the following statements is true? a. Marginal revenue product is the extra revenue generated to the firm from the production of one more unit of output. b. Marginal factor cost is the extra cost to a firm of employing one more unit of a factor of production. c. The demand curve for a perfectly competitive employer is horizontal at the market wage rate. d. The supply curve of labor is upward sloping because of the law of diminishing marginal productivity.

collective bargaining

_____________is the process of negotiations between the union and management over wages and working conditions.

Marginal Revenue Product

___________equals the price of the product times the worker's marginal product.

Deregulation

___________is the elimination or phasing out of government restrictions on economic activity.