Econ Test 3 Chapters 10,11,13,16,19

In Figure 24.2, a profit-maximizing monopolist will charge a price of

$5.50

A patent gives a firm the exclusive right to produce a product for

20 years.

The bottom 80 percent of families in Alpha receive approximately what percentage of total income? (See Figure 33.1.)

50 percent.

Which of the following is likely to be a monopolist?

A drug firm that has a patent granting it the exclusive right to produce a drug.

Income is measured as

A flow only.

When the market does not lead to an optimal allocation of resources, there must be

A market failure.

Which of the following is a barrier to entry in a monopoly market?

A patent on a new product.

In Figure 24.1, total revenue is represented by the area

ABFE.

The most common form of nonprice competition is

Advertising

The major aim of government regulation is to

Alter industry behavior.

A barrier to entry is

An obstacle that makes it difficult for new firms to enter a market.

Which of the following is a form of government intervention that is designed to correct market failures?

Antitrust laws.

The market supply curve for labor curve is upward-sloping because

As the wage rises, most workers are willing to work more hours.

Monopolists set prices

At the output where marginal revenue equals marginal cost.

A monopoly

Charges higher prices than competitive firms, ceteris paribus.

All of the following are examples of natural monopolies except

College bookstores.

Figure 33.3 illustrate four different Lorenz curves. Assume Brazil has a larger Gini coefficient than the United States. If the income distribution for the United States is represented by curve C, which curve would most likely represent the income distribution for Brazil?

D.

If the demand for alarm clocks decreases, the effect on the alarm clock job market will be to

Decrease the demand for labor and reduce equilibrium wages.

A cartel is

A public agreement between firms or countries to restrict production and raise prices.

In Figure 24.1, the profit-maximizing monopolist will charge a price of

A.

If consumers decide to buy fewer strawberries, then the

Demand for strawberry pickers will fall.

When oligopoly firms collude to raise prices,

Each firm benefits, but society loses.

Which of the following is a barrier to entry in a monopoly market?

Economies of scale

Price leadership is a method by which oligopolies can

Increase prices without explicit price-fixing.

If the demand for hair gel increases, the effect on the hair gel manufacturing job market will be to

Increase the demand for labor and increase equilibrium wages.

In the United States between 2000 and 2013, the Gini coefficient

Increased, indicating greater income inequality.

In-kind benefits are a way of correcting

Inequity.

There is an inherent tendency of a monopoly industry to

Inhibit productivity advances.

If leisure activities become more attractive, there will be a

Leftward shift of the labor supply curve.

To maximize profit, a natural monopolist produces the level of output at which

Marginal revenue equals marginal cost.

Which of the following is an argument in favor of a competitive market structure rather than monopoly?

Monopolies produce less at a higher price than competitive markets, ceteris paribus.

The correct ranking of degree of market power (from highest to lowest) is

Monopoly, oligopoly, monopolistic competition, perfect competition

An individual's labor supply curve

Slopes upward initially, and then may bend backward.

A tax is progressive if it takes a

Smaller fraction of income as income falls.

In Figure 30.2, a minimum wage of $20 will result in a

Surplus of 32 workers.

Which of the following prohibits price discrimination, certain types of mergers, and interlocking boards of directors among competing companies?

The Clayton Act.

Which of the following was the first to prohibit "conspiracies in restraint of trade"?

The Sherman Act.

The market supply of labor is

The amount of labor all workers supply at different wage rates.

A natural monopoly can purposely increase its cost of production by

Using its own unregulated subsidiary to inflate its cost.

In Figure 30.2, unemployed labor at the equilibrium wage is equal to

Zero workers.

Republicans argue that labor demand is _______, so ________ jobs will be lost when the minimum wage is raised

elastic; many

Barriers to entry are obstacles, such as patents, that make it difficult for new consumers to enter a market.

false

In how many markets do fewer than four firms produce at least 80 percent of total output?

12

The number of people employed in the competitive market depicted in Figure 30.2 at a wage of $20.00 per hour is

160.

Suppose there are only three firms in a market. The largest firm has sales of $500 million, the second-largest has sales of $300 million, and the smallest has sales of $200 million. The market share of the largest firm is

50 percent.

The long-run average total cost curve of a natural monopolist

Falls continuously as more output is produced.

Public housing is an example of

In-kind income

Which of the following is not consistent with a minimum wage that is set above the equilibrium wage?

There will be no unemployment.

If wages are relatively high, the individual labor supply curve may

Bend backward.

In Figure 30.1, the labor supply could shift from S1 to S2 due to all of the following except

Fewer workers preferring to work in this labor market.

A mathematical summary of inequality based on the Lorenz curve is known as the

Gini coefficient.

Government failure occurs when

Government intervention fails to improve economic outcomes.

The size distribution of income in Figure 33.1 reveals that

Incomes are more equally distributed in Alpha than in Omega.

If the entire output of a market is produced by a single seller, the firm

Is a monopoly.

The long-run average total cost curve of a natural monopolist

Is downward-sloping in the relevant range of production.

A natural monopoly is a desirable market structure because

It allows the producer to deliver products to the market at the lowest possible cost.

A firm's demand for labor is referred to as a derived demand because

It is derived from the demand for the product that the labor is producing

The willingness to work a certain amount of time at a given wage rate is known as

Labor supply.

If payroll taxes are increased, there will be a

Leftward shift of the labor supply curve.

Compared with a competitive market with the same cost and market demand circumstances, a monopolist has

Less pressure to reduce costs and less reason to improve quality.

In Figure 33.1, suppose that the Gini coefficient for Omega is 0.55. The Gini coefficient for Alpha must be

Less than 0.55.

If income is distributed equally, the

Lorenz curve is a straight line.

A graphic illustration of the cumulative size distribution of income is known as the

Lorenz curve.

Monopolists are price

Makers, but competitive firms are price takers.

In which of the following market structures are entry barriers the highest?

Monopoly.

Market failure

Occurs whenever an imperfection in the market mechanism prevents optimal outcomes

Which market structure is characterized by a few interdependent firms?

Oligopoly.

The concentration ratio for an oligopoly is

Over 60 percent.

To maximize profits, an unregulated natural monopolist would choose which combination of price and output in Figure 27.1?

P2, Q2.

It is easiest for new firms to enter a

Perfectly competitive market.

If a natural monopoly was forced to break up into several small competitive firms, the

Price charged by the competitive firms should increase because they no longer have economies of scale.

Profit regulation occurs when regulation requires the natural monopolist to set

Price equal to average total cost.

The pricing strategy in which there is an explicit agreement among producers regarding price is called

Price-fixing

The kinked demand curve explains the observation that in oligopoly markets

Prices may not change even in the face of cost increases.

Oligopolists have a mutual interest in coordinating production decisions in order to maximize joint

Profits.

The U.S. federal income tax is classified as a

Progressive tax only.

If the percentage of income paid in taxes increases as income rises, then the tax system is

Progressive.

Which of the following is used as an antitrust tool that focuses on the structure of industry?

Prohibiting mergers and acquisitions.

The concentration ratio measures the

Proportion of total output produced by the four largest producers in a specific market.

Economies of scale refer to the

Reduction in minimum average costs due to an increase in plant size.

If a natural monopoly was broken into several smaller competing firms,

Society would be worse off because the economies of scale would be destroyed.

The Herfindahl-Hirshman Index is the sum of the

Squared market shares of the firms in the market.

The Microsoft Corporation was sued by the government for all but which one of the following antitrust violations?

Stealing competitors' secrets.

The wage rate is

The payment for labor.

When firms are interdependent,

The profit of one firm depends on how its rivals respond to its strategic decisions.

Game theory is

The study of how decisions are made when interdependence exists between firms.

Which of the following would not shift the market demand for labor, ceteris paribus?

The wage paid to labor.

The shaded area in Figure 24.1 represents

Total profit.

Suppose there are three firms in a market. The largest firm has sales of $50 million, and each of the other two firms has sales of $25 million. The Herfindahl-Hirschman Index of this industry is

3,750.

In Figure 24.2, the profit-maximizing level of output is

4 units.

For a minimum wage to have any impact on a labor market, it must be set at a level

Higher than the equilibrium wage.

In the real world, the choice is between

Imperfect markets and imperfect government intervention.

Medicare is an example of

In-kind income.

Wealth refers to

The market value of assets people own.

Democrats argue that labor demand is _______, so ________ jobs will be lost when the minimum wage is raised.

inelastic; few

In Figure 30.2, the equilibrium wage rate is

$16 per hour.

In the long run, an oligopolist is most likely to

Experience economic profits because of barriers to entry.

The profit-maximizing rate of output in Figure 24.1 is

F.

An unregulated natural monopoly can lead to

Higher prices for consumers.

A natural monopoly occurs because of

The existence of economies of scale.