Exam 3

In the Microsoft antitrust case the final settlement with the U.S. government involved:

A behavioral remedy prohibiting certain business practices

In a bilateral monopoly, there is:

A monopsonist facing a monopolist

Social regulation:

Applies more broadly and affects more people than industrial regulation

Supporters of the minimum wage contend that it:

Critics analyze its impact in an unrealistic context

Exclusive unionism has the economic effect of:

Decreasing the supply of labor

The labor demand curve of a firm which is selling its product in an imperfectly competitive market will:

Fall, both because of declining marginal productivity and declining product prices

(T/F) The cornerstone of antitrust policy in the United States is generally considered to be the Sherman Antitrust Act of 1890.

False

An example of social regulation would be the:

Food and Drug Administration

The reason that the supply curve for labor in a purely competitive market rises is because

Higher wages must be paid to bid workers away from other opportunities

Critics of the minimum wage argue that an increase in the minimum wage rate above the equilibrium rate of a purely competitive labor market would:

Increase unemployment in the labor market

Laws and government actions designed to prevent monopoly and promote competition are the focus of:

Industrial regulation

The best example of a craft union would be the:

International Brotherhood of Electrical Workers

The basic explanation for high real wages in the United States and other industrially advanced economies is that the:

Labor demand has increased more rapidly than labor supply

If a perfectly competitive firm hiring labor in a perfectly competitive labor market hires labor until MRPL<W for the last unit of labor hired:

Labor's share of total cost is too large

Other things being equal, imperfect competition in resource markets results in:

Less labor hired than if resource markets were competitive

The basic purpose of antitrust laws is to:

Limit monopoly power in industry

Compared to a purely competitive firm, a monopsonist will pay:

Lower wage rates and hire fewer workers than the purely competitive firm

Most economists conclude that the deregulation of industry in the 1970s and 1980s led to:

More competition among firms in an industry

Suppose a powerful labor union negotiates a wage for its members above the equilibrium wage rate in a nonunionized market. A likely result of this is that:

Not everyone who wants to work at the new wage will be able to find jobs

A labor market application of the legal cartel theory would be:

Occupational licensing

A competitive employer will hire inputs up to the point where the

Price of the input equals the marginal revenue product of the input

The strength of the demand for a resource depends on the

Price of the product the resource helps produce

Real wages would rise if the:

Prices of goods and services rose less rapidly than nominal-wage rates

Assume that initially your nominal wage was $20 an hour and the price index was 100. If the price level increases to 107, then your:

Real wage has decreased to $18.69

Which is the most valid criticism of the regulation of natural monopolies and other firms subject to regulation by regulatory commissions?

Regulated firms may have little incentive to contain costs since they are assured a "fair" return above costs

Craft unions typically attempt to increase wage rates for their members by:

Restricting the supply of skilled workers through worker licensing and training requiremen

A firm in a purely competitive product market finds it must increase wages to attract extra workers. The firm will hire labor up to the point where the marginal:

Revenue product equals the cost of hiring an extra worker

The Federal court case against Microsoft, filed in 1998, was based on the:

Sherman Act

Government regulation concerning the conditions under which goods are produced and the physical characteristics of goods is known as:

Social regulation

The proposed remedy for Microsoft violations of antitrust laws in the 2000 ruling from a Federal District Court was to:

Split Microsoft into two companies

Which is the best example of social regulation?

The Consumer Product Safety Commission

An increase in the demand for computers leads to an increase in demand for computer programmers. This situation arises because?

The demand for programmers is a derived demand

Marginal resource cost is

The increase in a firm's total cost caused by hiring one additional unit of an input

A profit-maximizing firm will use additional units of resources for production until:

The marginal revenue product equals the marginal resource cost

The wage rate is:

The price paid per unit of labor services

One of the major problems with the deregulation of electricity in California in 2001 was that:

The wholesale market for electricity was deregulated but the retail market was not

Business combinations in the 1870s and 1880s that came to dominate an industry and assigned control to a single decision group are referred to as:

Trusts

A 2000 ruling by a Federal court found that Microsoft:

Used anticompetitive practices to maintain and broaden its monopoly power

In pure competition, a profit-maximizing firm will equate the marginal revenue product of labor with the:

Wage rate

In a purely competitive market, a firm that hires labor is a

Wage taker

Derived demand is the demand

for a resource to produce a product

If the marginal revenue product (MRP) of labor is less than the wage rate

less labor should be employed

A profit-maximizing firm should hire an input as long as the

marginal revenue product of the input is at least as much as the cost of hiring the input

Marginal revenue product describes the

revenue received for the output produced by the last unit of labor employed