Micro - Exam II
Antitrust enforcement focuses on industry market structure and company _____.
behavior
One Front Page Economics article titled "Recycling Wastes Money" suggests that the government has decided to intervene by
bypassing the market.
Which of the following is the prime cause of the greenhouse effect?
carbon dioxide
All of the following are examples of natural monopolies except
college bookstores.
The Clean Air Acts of 1970 and 1990 reduced pollution through
command-and-control regulatory standards.
Which of the following is an example of bypassing the market through regulation to achieve environmental protection?
command-and-control standards
Market failure occurs in natural monopolies because
consumers get inaccurate information about the opportunity cost of the product.
Market power is the ability of a firm to
control the price and quantity supplied.
The goal of antitrust laws is to
control the structure of an industry or prevent the abuse of market power.
Shares of ownership in a corporation are known as
corporate stock.
According to EPA studies, the United States generates over ____ billion tons of solid waste each year
5
Only ____ percent of the U.S. population is served by a system of sewers and adequate water treatment plants
70
What percentage of the 20,000 collective bargaining agreements negotiated each year are concluded without recourse to a strike?
90 percent
When the government forces a natural monopoly to produce output at a level at which its price equals its marginal cost, then the firm's profits will _____ because the marginal cost is always _____ the average total cost.
decrease; below
A five-cent container deposit on bottles
decreases the price of recycled materials and thus encourages recycling.
Which of the following markets has not been subject to substantial deregulation?
Agriculture
Which of the following industries was substantially deregulated over the last several decades?
Airlines
Marginal physical product diminishes as additional workers are hired because
each worker has an increasingly smaller amount of other factors with which to work.
Which of the following is a market incentive to discourage pollution?
Emission charges and user charges
A five-cent container deposit on bottles
Increases the incentive to recycle.
Microsoft's argument against the government's antitrust suit included all but which one of the following?
It was a natural monopolist.
Which of the following was the first to prohibit "conspiracies in restraint of trade"?
The Sherman Act
Output regulation is likely to result in
a decline in the quality of the product.
Which of the following would not shift the market demand for labor, ceteris paribus?
a decrease in the minimum wage
An emission charge is
a fee imposed on polluters based on the quantity of pollution they generate.
All of the following can be costs of environmental cleanup except
a higher number of homeless pets.
An example of a negative externality in consumption is
a kid throwing a used soda can in the trash versus recycling.
An example of a negative externality in consumption is
a passenger on a train littering.
Which of the following is a common barrier to entry in a monopoly market?
a patent on a new product
An example of a negative externality in production is
a power plant's release of thermal pollution into a nearby river.
Which of the following industries is not an example of monopolistic competition?
airlines
The major aim of government regulation is to
alter industry behavior.
When the FCC hires a new lawyer to help enforce government regulation, her salary is an example of
an administrative cost of regulation.
The Braden brothers considered starting a new skydiving company. Once they read the government regulations they would have to comply with, they changed their minds. This is an example of
an efficiency cost of regulation.
Which of the following can the government use to alter both firm behavior and industry structure?
antitrust laws
The _____ decision is one in which the firm chooses a production process that minimizes its costs for a given output level.
efficiency
Which of the following is a form of government intervention where market power prevails?
enforcement of antitrust laws
In a contestable market,
entry occurs when prices rise above average total costs.
When a firm uses marginal cost pricing, it charges a price that is _____ the marginal cost of production.
equal to
Antitrust enforcement focuses on market structure, while government regulation deals with all of the following except
equilibrium supply.
By altering market incentives, the government tries to shift
external costs to the producer.
The long-run average total cost curve of a natural monopolist
falls continuously as more output is produced.
Product differentiation refers to
features that make one product appear different from competing products in the same market.
All of the following can be costs of environmental cleanup except
fewer hospital visits.
Which of the following is not characteristic of monopolistic competition?
firms with zero control over price
In an effort to maximize profits, oligopolists could participate in all of the following except
game theory.
Government intervention that fails to improve economic outcomes is known as
government failure.
Price-discriminating firms charge higher prices to those who
have lower price elasticities of demand.
Compared with the profit-maximizing choice of a natural monopolist, output regulation will result in a
higher level of output and a lower price.
An unregulated natural monopoly can lead to
higher prices for consumers.
Opportunity wage refers to the
highest wage an individual would earn in his or her best alternative job.
If leisure activities become more attractive, there will be a
leftward shift of the labor supply curve.
When management shuts down a plant and does not allow workers to perform their jobs, there is a
lockout.
Which of the following would definitely not be used by any unregulated monopolist?
marginal cost pricing
If a firm that pollutes wants to maximize its profits, it will produce where
marginal revenue and private marginal cost are equal.
To maximize profit, a natural monopolist produces the level of output at which
marginal revenue equals marginal cost.
Regulation is appropriate if
market failure exists and the benefits of regulation exceed the costs.
When firms have the ability to restrict output, raise prices, stifle competition, and inhibit innovation, the market failure involved is
market power.
When external costs exist,
market prices do not convey the full costs of production.
An industry in which one firm can achieve economies of scale over the entire range of market supply is a
natural monopoly.
Regulation seeks to change market outcomes directly by imposing specific limitations on price, _____, or investment decisions.
output
Antitrust enforcement focuses on market structure, while government regulation deals with all of the following except
perfect competition.
Price leadership
permits oligopolistic firms in a given market to coordinate marketwide price changes.
Which of the following does not function as a barrier to entry into an oligopoly market?
predatory pricing
Temporary price reductions intended to alter market shares or drive out competition are referred to as
predatory pricing.
What is meant by price efficiency?
price is equal to marginal cost
Laws requiring the sorting and recycling of trash are an example of
process regulation.
A monopoly realizes larger profits than a comparable competitive market by
reducing production and pushing prices up
Market failure can result from all of the following except
restrictions on mergers.
The marginal cost of reducing pollution
rises as the environment gets cleaner
What development turned the cable TV market into a contestable one?
satellite and broadband technology
If the marginal cost curves of the private industry and social realm are the same, then we can conclude
the implementation of an emission charge was successful.
A competitive firm should continue to hire workers until the MRP is equal to
the market wage rate.
The wage rate is
the payment for labor.
Social costs are
the total resource costs of an economic activity.
According to the text, which of the following is a form of water pollution?
thermal pollution
Which of the following is not a form of air pollution?
thermal pollution
A nationwide concentration ratio is likely to _____ market power when the market is small and local.
understate
The old industrial unions are being supplanted by
unions of service workers.
Entry into a market characterized by monopolistic competition is generally
very easy because few barriers exist.
Which of the following industries is likely to have the highest concentration ratio?
video game systems
A natural monopoly
will charge high prices if unregulated.
Labor supply can be defined as the
willingness and ability of people to work specific amounts of time at alternative wage rates in a given period of time, ceteris paribus.
Which of the following characterizes monopolistic competition?
zero long-run profit
According to the text, which of the following is a form of water pollution?
Organic pollution
Proponents of electric utility industry deregulation argued that deregulation was justified because
improvements in technology allowed the development of high-voltage transmission power lines
The goal of a company in an oligopoly industry is to
increase market share and profits.
If the demand for hair gel increases, the effect on the hair gel manufacturing job market will
increase the demand for labor and increase equilibrium wages.
An unregulated natural monopoly can lead to all of the following except
increased education levels of workers.
An emission charge
increases private marginal cost and reduces output.
If the government forces a natural monopoly to produce the output level at which P = MC, the firm will
incur losses.
A monopsony
is a market in which there is only one buyer.
For a natural monopoly, marginal cost
is always below average total cost in the relevant range of production.
The long-run average total cost curve of a natural monopolist
is downward-sloping in the relevant range of production.
All of the following are negative externalities in production except
secondhand smoke in a restaurant.
The behavior of profit-maximizing producers is guided by
self-interest.
External costs are the difference between
social costs and private costs.
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 marginal factor cost for labor is
the change in total costs that results from a one-unit increase in the quantity of a factor employed.
The text discussion of coal regulations that were enacted in 2011 and 2014 implied that
the costs of pollution abatement must be balanced against the benefits.
