micro final

A network effect arises whenever

a consumer's willingness to purchase a good or service is influenced by how many others also buy or have bought the item.

A tariff is

a tax on imported goods

A firm that responds to a regulatory rule in a way that permits technical compliance while allowing the firm to violate the spirit of the regulation has.

engaged in a creative response to regulation

If firms in a monopolistically competitive industry experience short-run losses

some firms exit the industry, causing the demand curves for the remaining firms to shift to the right until they earn a normal profit

Which of the following is NOT a cause for an oligopoly to exist?

structural dependence

In comparing tariffs and quotas, we know that

tariffs raise revenues for the federal government, while quotas do not

One problem with the infant industry argument is that

the tariff protection is typically never removed due to political considerations, and the protection serves as a barrier detering competition and creating domestic monopoly

The contention that tariffs should be imposed when a foreign government provides financial assistance to its producers is

to counter foreign subsidies

To avoid tariffs, a Japanese firm moves its final assembly line to Mexico and then ships the final products to Canada. This is an example of

trade deflection.

Your teacher decides to play a game where every student must contribute a dollar. All money collected is distributed at the end of the game among the students. This is an example of a

zero-sum game

Legislation that makes it illegal to require union membership as a condition of continuing employment is the

collection of right-to-work laws

In the above table, what is the marginal factor cost of the 4th worker?

$22

The above table depicts prices, quantities, and marginal costs faced by the campus bookstore. At the profit-maximizing level of output, what is the profit earned by the store?

$6

In a monopsonistic market

both employment and wages are lower than in a comparable competitive market.

In the above figure, if the monopolist engages in marginal cost pricing, what are its output and price?

1,200, $3

Use the above table. Assuming constant opportunity costs, a comparative advantage in producing wine is possessed by

Argentina.

Which of the following statements concerning the prisoner's dilemma is true?

Confessing is the dominant strategy for both players.

Which of the following best describes the difference between cost-of-service regulation and rate-of-return regulation?

Costs determine prices in cost-of-service regulation and prices are set in rate-of-return regulation so the firm can make a normal rate of return

The monopolistically competitive firm's economic profits tend toward zero in the long run. Why is this so?

In the long run, other firms will successfully offer substitutes for the profitable firm's product, and competition will eliminate economic profits

Which of the following is NOT a benefit of international trade?

It promotes self-sufficiency

The president of the United States can obtain a court injunction that will stop a strike for an 80-day "cooling-off"period if the strike is expected to imperil national safety or health. This power is granted in the

Taft-Hartley Act

Over the past several decades, U.S. firms have faced more competition from overseas firms. Does this have any impact on the market power of U.S. oligopoly firms?

Yes, competition from overseas firms can substantially limit domestic firms' market power.

If the producer of an information product engages in marginal cost pricing, it earns

an economic loss

The existence of economies of scale is one reason oligopolies exist because

as output increases average total cost decreases leading to large-scale firms

Advertising is used by firms in a monopolistic competitive industry to

increase demands for their individual products, differentiate their product from those of competitors, increase brand loyalty.

If a union negotiates and obtains a wage rate above the competitive wage rate

it must find a way to ration jobs among the excessive number of workers who wish to work in the union sector

a tariff shifts the supply curve to the _____ on a graph

left

One method unions use to ration available jobs among excess workers is

lengthy apprenticeships

In the above figure, the profit-maximizing monopolistically competitive firm will

make a profit of $30,000.

A game in which players as a group lose at the end of the game is referred to as

negative-sum game

The dominant strategy allows a firm to

obtain the highest benefit, regardless of its rivals' actions.

Game theory is also used to explain the pricing behavior of

oligopolies.

Credit card companies that operate as intermediary firms between credit card holders and business vendors are best described as

platforms in a transaction-based market

In some cases, social regulation may alter individuals' behavior. For example, there is evidence to indicate that as more automobile safety regulations have been introduced, more individuals have begun to drive recklessly. This phenomenon is known as

the feedback effect.

Suppose that a regulatory agency has imposed marginal cost pricing on a natural monopolist. We expect that

the firm will eventually go out of business.

Under the U.S. system of regulation, most regulars are selected from

the industry that is to be regulated

The monopsonist will employ labor to the point at which the

marginal factor cost equals the marginal revenue product of labor.

The two most important rationales for government intervention in non-monopolistic markets are

market failure and asymmetric information.

Consider four types of markets: monopoly, perfect competition, oligopoly, and monopolistic competition. If they were ranked from the lowest number of firms to the largest number of firms the ranking would be:

monopoly, oligopoly, monopolistic competition, perfect competition

When there is only one buyer of labor in a community, we talk of a

monopsony

Compared with a monopolist, the demand curve faced by a monopolistically competitive firm is

more elastic

Which of the following is the situation in which a nation shifts its international trade from nations outside a regional trade bloc to nations within the bloc?

trade diversion

Suppose a new EU member begins substituting its imports from non-EU members to other EU members. This is an example of

trade diversion.

If a union succeeds in forcing employers in a perfectly competitive product market to increase wages above the equilibrium level, then the level of unemployment

will increase