Exam 3 Review Eco2023 Tucker

Goals of labor unions:

-higher pay -better working conditions -benefits for workers

Settling labor-management Disputes

1. Strike (last resort) 2. Arbitration (Judge comes in) 3. Mediation (Mediator or third party comes into play)

Reasons for change in Labor

1. factor productivity 2. the price of the product 3. relative prices

Characteristics of a monopolistic competition

1. large number of firms of different sizes 2. similar but not identical products 3. relatively easy entry

Characteristics:

1. significant barriers 2. few sellers in the market 3. Interdependence that leads to coordination collusion 4. cartels may be formed

Before deciding on a pricing strategy, Worldwide Widgets consults with its market intelligence team to understand what discounts the Gargantuan Gizmo Company is offering. The model that BEST fits this industry is: A. an oligopoly. B. pure competition. C. a monopoly. D. monopolistic competition.

A

If Nintendo lowers the price of its product by $10, Sony responds by lowering the price of its own product by $10 and chooses not to cooperate again. This is an example of what type of game strategy? A. grim trigger B. tit-for-tat C. predatory pricing D. trembling hand trigger

A

If Tamara is given a $3-per-hour pay increase, and in response, she decides to work more hours, then: A. Tamara's work hours are represented on the upward-sloping portion of her labor supply curve. B. the income effect is dominating the substitution effect. C. Tamara's work hours are represented on the downward-sloping portion of her labor supply curve. D. Tamara's labor supply curve is flat.

A

If wages increase at a 5% rate and the quantity demanded of labor decreases by 10%, then the elasticity of demand for labor is: A. 2. B. 50. C. 10. D. 0.5.

A

In an oligopoly, all the firms: A. take their competitors into account when they make pricing decisions. B. face easy entry and exit from the market. C. compete over price alone. D. compete over advertising

A

In recent years, the United States has produced a growing share of: A. intangible services. B. tangible, manufactured goods. C. tangible services. D. intangible, manufactured goods.

A

Robotic manufacturing has made labor demand for factory workers: A. more elastic. B. less elastic. C. perfectly inelastic. D. perfectly elastic.

A

The discovery of natural gas in the American Midwest should lead to a(n) ____ in the price of land because of a(n) _____ land. A. increase; increase in demand for B. decrease; increase in supply of C. increase; decrease in supply of D. decrease; decrease in demand for

A

What types of industries have been outsourced from the United States because of international trade? A. industries that require a large amount of labor B. industries that require highly skilled workers C. industries that require cell-phone connectivity D. industries that require a high degree of technology

A

Which game does NOT describe a Prisoner's Dilemma outcome? A. a game of chicken in which one player backs down while the other player does not B. cartel members attempting to increase profits by cheating on their production quotas C. rival department stores agreeing to accept each other's coupons and advertised specials D. competing electronics stores attempting to undercut each other's prices

A

Which of the following products is likely to be the MOST differentiated? A. garments sold to a retail customer B. fabric sold to a garment maker C. garments sold to a garment distributor D. cotton sold to a fabric maker

A

(Figure: Labor Supply Curve) Based on the graph, the income effect is shown by segment: A. ab. B. bc. C. ac. D. abc.

B

(Table) Boeing and Airbus can either comply with a cartel agreement or cheat. Based on the table, if this game is only played once, and each firm plays rationally: A. Boeing will cheat and Airbus will comply. B. both Boeing and Airbus will cheat. C. Boeing will comply and Airbus will cheat. D. both Boeing and Airbus will comply.

B

According to the segmented labor market view, unions restrict the labor supply in order to increase wages. As labor migrates to non-union markets, non-union wage rates fall. Which of these actions would reduce the incentive for firms to substitute non-union workers for union members? A. increasing the income tax on all workers B. increasing the minimum wage in the non-union markets C. providing more education and training for union members D. passing discriminatory laws that bar immigrants from certain jobs

B

If Nintendo lowers the price of its product by $10, Sony waits to see whether Nintendo's price cut was a temporary mistake. This is an example of what type of game strategy? A. predatory pricing B. trembling hand trigger C. tit-for-tat D. grim trigger

B

If a cartel member is considering cheating in order to earn profits, it should: A. increase the price of the goods it sells at the quota quantity. B. increase the quantity it sells at the quota price. C. decrease the price of the goods it sells at the quota quantity. D. decrease the quantity it sells at the quota price.

B

If firms in a monopolistically competitive industry are experiencing economic losses in the short run, some firms will _____ the industry, _____ demand until each firm earns a normal profit. A. enter; increasing B. exit; increasing C. enter; reducing D. exit; reducing

B

In a competitive labor market, if a new manufacturing plant seeks to build its labor force, it is assumed that: A. the jobs available at the manufacturing plant represent the best possible opportunity for each applicant. B. the quantity of workers available is greater than the quantity of workers that are required. C. applicants have the ability to negotiate their wage based on their qualifications. D. each applicant has a unique skill set.

B

When the individual labor supply curve is positively sloped, the _____ effect dominates and higher wages lead to _____ hours worked. A. substitution; fewer B. substitution; more C. income; fewer D. income; more

B

Which action can help increase the stability of a cartel? A. increase product differentiation B. increase government protection C. decrease barriers to entry into the industry D. increase the number of cartel members

B

Which statement is TRUE about public and private-employee unions? A. Only public-employee unions can call strikes, while private-employee unions tend to contribute less for their health insurance premiums. B. Only private-employee unions can call strikes, while public-employee unions tend to contribute less for their health insurance premiums. C. Only public-employee unions can call strikes and these unions tend to contribute less for their health insurance premiums. D. Only private-employee unions can call strikes and these unions tend to contribute less for their health insurance premiums.

B

Marginal Physical Product of labor (MPPL)

Change in TPP/Change in Quantity of labor

Marginal Revenue Product of labor (MRPL)

Change in Total Revenue/Change in Quantity

A Nash equilibrium: A. involves a zero-sum game scenario. B. can be found only in positive-sum games. C. assumes that some players are better equipped to strategize. D. assumes that each player chooses his or her best strategy.

D

Derived demand suggests that: A. the labor demand curve will be upward sloping. B. labor demand will shift in a random fashion. C. labor demand is determined by the supply of labor. D. labor demand is derived from demand for the product it produces.

D

Gary Becker's theory of economic discrimination argues that: A. non-discriminatory firms will attract the least productive managers and employees. B. employers who discriminate against women will gain market share. C. discrimination benefits only the person who discriminates. D. employers who discriminate against women will lose profit opportunities.

D

If Rosco's Tacos competes with eight other fast-food restaurants in the same neighborhood, and two of those rival firms exit the market, then: A. Rosco's supply curve will shift to the right. B. the market supply curve will shift to the right. C. the market demand curve will shift to the left. D. Rosco's demand curve will shift to the right.

D

If the price of diesel fuel increases, the MRP curve for truck drivers will: A. be perfectly elastic. B. shift to the right. C. be backward bending. D. shift to the left.

D

Monopolistically competitive markets and perfectly competitive markets do NOT share which characteristic? A. many firms in the market B. zero economic profits in the long run C. ease of entry into the market D. differentiated products

D

The industrial structure of cartels is an example of a(n): A. parlor game. B. asymmetric information game. C. noncooperative game. D. cooperative game.

D

The notion that individuals and firms are compelled to retaliate or punish others for engaging in noncooperative actions, but leaving the door open for future reconciliation, is BEST referred to as a(n): A. irrational strategy. B. trembling hand strategy. C. grim strategy. D. tit-for-tat strategy.

D

What percentage of families with small children are two-income households? A. 25% to 50% B. 10% to 25% C. less than 10% D. more than 50%

D

Value of Marginal product of labor (VMPL)

MPPL x Price

OPEC

Organization of Petroleum Exporting Countries

Monopolistic competition

a blend of monopoly and pure competition. It is a market structure where the relatively large number of firms produce similar but not identical products

production decision

a firm must produce at MR=MC

Cartel

a group of firms which enter into agreement to set neutrally acceptable prices and production quotas

Oligopoly

a market structure where a relatively small number of firms dominant the market

Collective bargaining

a process of negotiation between management and the union

Inclusive Union

a union that attempts to organize all the workers in an industry and to maintain a strong bargaining position with respect to management

Exclusive Union

a union that restricts the supply of labor and maintain a higher than competitive wages for its members by excluding workers into an occupation

Labor Union

an organization of workers that seek to gain some monopoly power

product differentiation

how you make your product stand out

Selling Costs

marketing expenditures that are aimed at adapting the buyer to a product

Monopsony

one buyer and many sellers

Bilateral Monopoly

one buyer and one seller

VMPL=MRPL

only in perfect competition

featherbedding

union practice of maintaining jobs that management claims are unnecessary or redundant

Companies will hire:

when MRPL=MRC

(Table) In the game table represented above, the dominant strategies are: A. Jesse plays Up and Katy plays Left. B. Jesse plays Up and Katy plays Right. C. Jesse plays Down and Katy plays Left. D. Jesse plays Down and Katy plays Right.

C

(Table) In the game table, the Nash equilibrium is: A. Down, Right = (5, 2) B. Up, Left = (4, 8) C. Down, Left = (6, 5) D. Up, Right = (3, 7)

C

A right-to-work law is a: A. state law making an open shop illegal. B. federal law making a union shop illegal. C. state law making a union shop illegal. D. federal law making a closed shop illegal.

C

Factory jobs are no longer plentiful in the United States. This is due to all of these EXCEPT: A. growth in international trade. B. the transformation of the manufacturing process through the growth of the Internet. C. more foreign direct investment into the United States. D. a shift to service industries.

C

One of the reasons that competition may fail to eliminate gender wage discrimination is: A. the cost of specific training. B. the cost of general training. C. lack of mobility. D. a mobile work force.

C

The act that makes it unlawful to refuse to hire a person based on their race, color, religion, sex, or national origin is the: A. Affirmative Action Act. B. Smoot-Hawley Tariff Act. C. Civil Rights Act of 1964. D. Equal Pay Act of 1963.

C

Which characteristic does monopolistic competition NOT have in common with perfect competition? A. Individual firms earn normal profits in the long run. B. Each firm has an insignificantly small market share. C. Products of individual firms are different. D. Entry and exit are easy.

C