exam 3 extraa

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What is the four-firm Concentration Ratio for the Pool Cleaning Industry? NOTE: This is where you use those numbers you wrote down earlier!

O 95%(add first four together than divide by the whole number )

A decrease in the demand for the output produced by these workers would cause:

O A decrease in labor demand and a decrease in the EQ wage rate

Suppose there is a decrease in the labor productivity of construction workers. The competitive labor market for construction workers in Texas would experience:

O A decrease in labor demand and a decrease in the EQ wage rate

When the firm produces Q* units of output, how much does it cost to produce the typical unit of output?

O ATC = $78

The two most common forms of non-price competition are:

O Advertising and product differentiation

For a Natural Monopoly, if we compare the firm's marginal cost with the firm's average total cost, we observe that the firm's marginal cost is:

O Always less than ATC in the relevant range of production.

A Contestable Market is:

O An imperfectly competitive market that is subject to potential entry.

Suppose there is an increase in the demand for new residential housing. The competitive labor market for construction workers in Texas would experience:

O An increase in labor demand and an increase in the EQ wage rate

The removal of restrictions on immigration to the United States would cause:

O An increase in labor supply and a decrease in the EO wage rate

According to the Required Course Textbook, firms in all of the following market have been accused of engaging in price fixing EXCEPT:

O Baby formula

Statement 1: In the short run, a Monopoly firm is most likely to earn above- normal economic profit. Statement 2: In the short run, it is possible for a Monopoly firm to take an economic loss.

O Both statements are correct.

Jerome owns a small business installing home security systems. Jerome charges each customer a price of $1,000 to install a security system. By himself, he can install four systems per month. If he hires an assistant, a total of ten systems can be installed per month. If he hires two assistants, a total of fifteen systems can be installed per month. What is the Marginal Revenue Product (MRP) of the first assistant and the Marginal Revenue Product (MRP) of the second assistant?

$6.000: $5.000

The optimal price (P) for this Monopoly firm to charge customers is:

$61 per unit of output

In the short run, a Monopoly firm's Economic Profit is most likely to be:

Greater than zero

The minimum wage impacts a competitive labor market by causing:

An increase in the quantity of labor supplied and a decrease in the quantity of labor demanded.

While there are many newspapers in the U.S., each city tends to have only one or two. If newspapers are generally local markets, then newspapers are characterized by a:

O Low national concentration and a high local-level concentration.

For a Monopoly firm, the profit-maximizing rate of output occurs where:

O MR = MC

How do we calculate a firm's Marginal Revenue (MR)?

O MR = change in Total Revenue divided by the change in the quantity of output sold

When firms have the ability to restrict output, raise prices, stifle competition, and inhibit innovation the market failure involved is:

O Market power

In which of the following market structures does a firm produce a unique product for which there are few good close substitutes?

O Monopoly

In the long run, this Monopolistically Competitive firm will:

O Not maintain this Economic Loss due to the low barriers to exit in this market

In the long run, this Monopolistically Competitive firm will:

O Not maintain this Economic Profit due to the low barriers to entry in this market

For this individual, over which wage rate range does the Income Effect dominate her labor supply choice?

O Over the $20 to $32 per hour wage rate range(look at upper part of graph)

A Monopoly firm will choose to shutdown production in the short run when and it will choose to exit from the marketplace in the long run when

O P' < AVC; P" < ATC

If the government applied Price Regulation to this Natural Monopoly, then the firm would be forced to choose which combination of price and output?

O Price of $8 per unit and quantity of 2200 units

According to the Required Course Textbook, General Electric and Westinghouse were convicted of:

O Price-fixing.

The key characteristic of Monopolistic Competition is:

O Product differentiation

The term Market Power refers to:

O The ability of a single firm to alter the market price of a particular good or service.

The term Market Power refers to:

O The ability to alter the market price of a product.

In the real world, which of these markets best illustrates the practice of price discrimination?

O The airline market.

Which of the following is the same for a Monopoly firm and a Perfectly Competitive firm, when operating under the same cost and demand conditions?

O The goal of maximizing Total Profit.

Which of the following is true about the equilibrium wage in the labor market?

O There is no unemployment in this market at the equilibrium wage.

It is possible for a Monopoly firm to take an Economic Loss in the short run.

O True

The kinked demand curve is really a composite of two separate demand curves.

O True

For an individual, the opportunity cost of working is the:

O Value of leisure time that must be given up in order to work.

What will happen to wages and the level of employment in a competitive market when the government LIMINATES a minimum wage, ceteris paribus?

O Wages will fall but employment will rise.

Suppose you are told that the MPP of an additional worker is 20 units of output per hour. The output produced by workers is sold to customers at a price of $6 per unit. The current wage rate for workers in this occupation is $100 per hour. Under these conditions, should the firm employ an additional worker?

O Yes, since the worker's MRP is greater than or equal to the market wage rate.

The optimal price (P*) for this Monopoly firm to charge customers is:

O$50 per unit of output

Distribution control can be accomplished through which of the following methods?

OLong-term supply contracts Warranty provisions O Selective discounts All of the above

When Oligopoly firms coordinate their production decisions, the market demand curve for the product they produce will be:

ORelatively inelastic, like that of a Monopoly firm

Market failure:

Occurs whenever an imperfection in the market mechanism prevents optimal outcomes.

The individual firm's demand curve for labor is downward sloping because:

Of diminishing returns to labor.

The pricing strategy in which temporary price reductions are used to drive out competition, or prevent new competition from entering, is called:

Predatory pricing

The term Marginal Cost Pricing means that goods should be supplied in quantities such that:

Price equals marginal cost.

Monopoly firms are sometimes referred to as:

Price makers, but Perfectly Competitive firms are sometimes referred to as price takers.

If the government applied Profit Regulation to this Natural Monopoly, then the firm would be forced to choose which combination of price and output?

Price of $10 per unit and quantity of 1500 units

To maximize Total Profit, an unregulated Natural Monopoly firm would choose to produce which combination of price and output?

Price of $14 per unit and quantity of 1000 units

If the government applied Price Regulation to this Natural Monopoly, then the firm would be forced to choose which combination of price and output?

Price of $8 per unit and quantity of 2200 units

A Monopoly firm is considered to be a:

Price setter, unlike Perfectly Competitive firms which are considered to be price takers.

A Monopoly firm will engage in price discrimination when it believes that doing so will increase the firm's:

Total profit

If the price reductions of one Oligopoly firm are matched by other Oligopoly firms, then the industry moves:

Toward the southeast along the Market Demand Curve and the total market output is increased.

In Monopolistic Competition, small changes in the output level or price of any individual firm will have no significant influence on the market shares of other firms.

True

In a Contestable Market, Monopoly firms do not act like typical Monopoly firms.

True

Lawsuits can act as a barrier to entry in Monopoly markets.

True

Monopolistic Competition def

a market structure in which many firms sell products that are similar but not identical, downward sloping, not identical product in the short run, in the long run other firms enter, demand falls

Natural Monopoly def

a market that runs most efficiently when one large firm supplies all of the output

Marginal Revenue def

extra revenue from the sale of one additional unit of output

Economies of Scale def

factors that cause a producer's average cost per unit to fall as output rises

Barriers to Entry def

factors that make it difficult and costly for an organization to enter a particular task environment or industry

Production Decision def

of all the different combinations of goods and services that we could produce, what specific combination will we produce?

Price Leadership def

one firm sets its price first, and other firms then follow

Predatory Pricing def

selling a product below cost to drive competitors out of the market

investment Decision def

the decision to build, buy, or lease plants and equipment; to enter or exit an industry

Marginal Cost Pricing def

the offer (supply) of goods at prices equal to their marginal cost

Concentration Ratio def

the percentage of the market's total output supplied by its four largest firms

Income Effect of Higher Wages def

an increased wage rate allows a person to reduce hours worked without losing income

Substitution Effect of Higher Wages def

an increased wage rate encourages people to work more hours (to substitute labor for leisure)

What is the market share for North Star Pool Cleaners? NOTE: Write this answer down on a piece of paper, as you will need it again soon!

e 40% (8000/20000)

Suppose the government makes an additional $600 per week in unemployment compensation benefits available to qualified individuals. The competitive labor market for construction workers in Texas would experience:

e A decrease in labor supply and an increase in the EQ wage rate

If an Oligopoly firm attempts to increase its own sales by reducing its price, its competitors are likely to:

e Decrease their own prices as well.

According to the Required Course Textbook, the value of the Concentration Ratic (CR) for an Oligopoly industry will typically be in the range of:

Oligopoly firms have a mutual interest in coordinating production decisions in order to maximize:

Currently, the Banana Republic Clothing Store is charging a price of $70 for a pair of men's skinny fit khaki pants. At that price, this company is able to sell 25 pairs of men's skinny fit khaki pants per week. In order to sell the 26th pair of these pants, Banana Republic must lower its price to $68 per pair. Calculate the Total Revenue (TR) generated by Banana Republic when it sells 26 pairs of pants per week.

$1.768

Suppose you are told that the MPP of an additional worker is 20 units of output per hour. The output produced by workers is sold to customers at a price of $6 per unit. The current wage rate for workers in this occupation is $100 per hour. The Marginal Revenue Product (MRP) of this worker is:

$120 per hour

Suppose the Doubletree Hotel (located in Downtown Tallahassee) charges customers a price of $175 per night for a stay in one of their standard rooms. At that price, the hotel fills 85 rooms per night. In order to fill the 86th room, the hotel must lower its standard room price to $165 per night. Calculate the Total Revenue (TR) generated by the hotel when it fills 86 rooms per night.

$14,190

$14,875

Currently, the Banana Republic Clothing Store is charging a price of $70 for a pair of men's skinny fit khaki pants. At that price, this company is able to sell 25 pairs of men's skinny fit khaki pants per week. In order to sell the 26th pair of these pants, Banana Republic must lower its price to $68 per pair. Calculate the Marginal Revenue (MR) from selling the 26th pair of pants.

$18

When the firm produces q* units of output, how much Total Profit (or Total Loss) does it earn?

$2,100(35-29=6 then 6x350=2100

The optimal price (P*) for this Monopolistically Competitive firm to charge customers is:

$26 per unit of output

$1,750

Suppose that a Monopoly pharmaceutical firm produces a medication for high blood pressure and can sell 50 prescriptions for this medication per hour at a price of $80 per prescription. In order to increase the quantity sold by prescription each hour, the Monopoly firm must lower the price of its prescription by $1 to $79 per prescription. What is the Monopoly firm's Marginal Revenue from selling the 51* prescription this hour?

$29

Suppose a firm operating in a market characterized by Monopolistic Competition produces 20 units of output. At this level of output, ATC = $35, P = $50, MR = $30, and MC = $30. The firm's Economic Profit is:

$300(price-atc,50-35=15,then15x20)

Šuppose you are told that the MPP of an additional worker is 12 units of output per hour. The output produced by workers is sold to customers at a price of $3 per unit. The current market wage rate for workers in this occupation is $40 per hour. The Marginal Revenue Product (MRP) of this worker is:

$36 per hour

Suppose that a Monopoly pharmaceutical firm produces a medication for high blood pressure and can sell 50 prescriptions for this medication per hour at a price of $8O per prescription. h order to increase the quantity sold by prescription each hour, the Monopoly firm must lower the price of its prescription by $1 to $79 per prescription. How much Total Revenue does the Monopoly firm generate when it sells 50 prescriptions per hour?

$4,000

Suppose that a Monopoly pharmaceutical firm produces a medication for high blood pressure and can sell 50 prescriptions for this medication per hour at a price of $80 per prescription. In order to increase the quantity sold by prescription each hour, the Monopoly firm must lower the price of its prescription by $1 to $79 per prescription. How much Total Revenue does the Monopoly firm generate when it sells 51 prescriptions per hour?

$4,029

Which of the following is likely to be a Monopoly firm?

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

If the Price Elasticity of Demand (PED) coefficient for airline tickets is 3.00 for a vacation traveler and 0.40 for a business traveler, then a Monopoly firm interested in price discrimination would charge:

A higher price for the business traveler and a lower price for the vacation traveler

When considering the supply of labor, the Income Effect claims that:

A higher wage rate allows people to reduce their hours worked without necessarily reducing the size of their paychecks.

When considering the supply of labor, the Substitution Effect claims that:

A higher wage rate encourages people to work more hours by increasing the opportunity cost of leisure time.

Oligopoly def

A market structure in which a few large firms dominate a market, ex phone companies (controlled by 4 main brands)

According to the textbook, the reward from working comes in two forms. They are:

A paycheck and satisfaction from working

Price Discrimination occurs when:

A single firm charges different customers different prices for the same good or service.

Price Discrimination ocurs when:

A single firm charges different customers different prices for the same good or service.

The number of firms in a market characterized as Oligopoly must be:

A small enough number so that the production decision made by one firm does impact the production decisions made by the other firms in the market.

The number of firms in a market characterized as Oligopoly must be:

A small enough number so that the production decision made by one firm does impact the production decisions made by the other fırms in the market.

When the firm produces q* units of output, how much does it cost to produce the "typical unit" of output?

ATC = $26 (look for atc on the 1700 line)

When the firm produces q* units of output, how much does it cost to produce the "typical unit" of output?

ATC = $31

When the firm produces q* units of output, how much does it cost to produce the typical unit of output?

ATC = $57

The optimal price (P*) for this Monopoly firm to charge customers is:

ATC=12

The two most common forms of non-price competition are:

Advertising and product differentiation

In an effort to maximize profts, Oligepely firms will participate in:

Al of the above

Distribution control can be accomplished through which of the following methods?

All of the above

Which of the following functions as a barrier to entry into an Oligopoly market?

All of the above.

Which one of the following is a danger of experimenting with pricing for an Oligopoly firm?

All of the above.

The determinants of market power include:

All of these are determinants of market power

In the United States, the primary purpose of antitrust policy is to:

Alter the structure of markets and behavior of firms to encourage competition among firms

For a Natural Monopoly, if we compare the firm's Marginal Cost (MC) with the firm's Average Total Cost (ATC), we observe that the firm's Marginal Cost is:

Always less than ATC in the relevant range of production.

If government regulation limits the number of hours per week a scientist can work in the pharmaceutical industry, then this regulation creates:

An efficiency cost of regulation

An increase in the labor productivity of these workers would cause:

An increase in labor demand and an increase in the EQ wage rate

Suppose the government removes all restrictions on South/Central American immigration to Texas. The competitive labor market for construction workers in Texas would experience:

An increase in labor supply and a decrease in the EQ wage rate

Which of the following most clearly illustrates the concept of derived demand?

An increase in the demand for mental health counseling leads to an increase in the demand for people with college degrees in psychology and social work.

Which of the following most clearly illustrates the concept of derived demand?

An increase in the demand for mental health counseling leads to an increase in the demand for workers with college degrees in psychology and social work.

The minimum wage impacts competitive labor market by causing:

An increase in the quantity of labor supplied and a decrease in the quantity of labor demanded

A barrier to entry is:

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

Suppose the Doubletree Hotel (located in Downtown Tallahassee) charges customers a price of $175 per night for a stay in one of their standard rooms. At that price, the hotel fills 85 rooms per night. In order to fill the 86th room. the hotel must lower its standard room price to $165 per night. Calculate the Marginal Revenue (MR) from filling the 86th room.

-685(175x85=14875 then 165x86=14190 then subtract eachother)

1,750(70x25)

1,768(68x26)

What is the Marginal Physical Product (MPP) of the fourth hair stylist?

10 appointments per week

What is the market share for Lyle's Lawn Service?

10%

What is the market share for Clean Sweep Pool Cleaners? NOTE: Write this answer down on a piece of paper, as you will need it again soon!

10%(2000/20000)

The optimal quantity of output (Q") for this Monopoly firm to produce is:

110k units of output

What is the market share for Luke's Lawn Service?

12%

14,190(86x165)

14,875 (175x85)

What is the market share for Landon's Lawn Service?

15%

18(70x25=1750 then 26x68=1768 then subtract

Suppose a Monopoly concrete contractor builds 20 driveways per month for $10,000 each. In order to increase sales to 21 driveways, the contractor must lower the price of driveways to $9,500 each. Calculate the Total Revenue (TR) generated by the Monopoly firm when it builds 21 driveways per month. NOTE: If you think the answer is $8,250, then just enter 8250 into the box provided.

199,500

According to the Required Course Textbook, the value of the Concentration Ratio (CR) for a Monopolistically Competitive industry will typically be in the range of:

20 to 40 percent

In the United States today, a patent gives a firm the exclusive right to produce a product for:

20 years

In the United States today, a patent gives a firm the exclusive right to produce a product for;

20 years

What is the market share for Larry's Lawn Service?

20%

What is the market share for Blue Lagoon Pool Cleaners? NOTE: Write this answer down on a piece of paper, as you will need it again soon!

20%(4000/20000)

200,000

This individual works how many hours when her wage rate is $10 per hour?

22 hours per week(look for $10 on wage rate)

At the equilibrium wage rate, there are people who are employed.

2200

250

If a minimum wage of $24 per hour was imposed on this labor market, business owners would be willing to hire people at this wage rate.

2500

The optimal quantity of output (q*) for this Monopolistically Competitive firm to produce is:

2500 units of output

Suppose a hair stylist is paid $800 per week. How many hair stylists should a profit- maximizing salon owner hire?

3 hair stylists

What is the market share for American Pool Cleaners? NOTE: Write this answer down on a piece of paper, as you will need it again soon! 5%

5 percent(1000/20000)

Suppose a Monopoly firm produces bicycles and can sell 8 bicycles per month at a price of $700 per bicycle. In order to sell 9 bicycles per month, the Monopoly fırm must lower the price of its bicycles to $650 per bicycle. Calculate the Total Revenue (TR) generated by the Monopoly firm when it sells 8 bicycles per month. NOTE: If you think the answer is $8,250, then just enter 8250 into the box provided.

5,600 (with margin: 0)

Suppose a Monopoly firm produces bicycles and can sell 8 bicycles per month at a price of $700 per bicycle. In order to sell 9 bicycles per month, the Monopoly firm must lower the price of its bicycles to $650 per bicycle. Calculate the Total Revenue (TR) generated by the Monopoly firm when it sells 9 bicycles per month. NOTE: If you think the answer is $8,250, then just enter 8250 into the box provided.

5,850

At the equilibrium wage rate, there are people who are employed.

5000

The optimal quantity of output (q*) for this Monopolistically Competitive firm to produce is:

5000 units of output

Which of the following is not a regulatory option when the government is trying to prevent market failure in the case of a Natural Monopoly

6 Cost regulation.

Suppose there are only three firms in a market. The largest firm has sales of $250 million, the second-largest has sales of $100 million, and the smallest has sales of $50 million. The market share of the largest firm is:

62.5 percent(250/400=)

According to the Required Course Textbook, the value of the Concentration Ratio (CR) for an Oligopoly industry will typically be in the range of:

70 to 100 percent

What is the four-firm Concentration Ratio for the Tallahassee Lawn Service Industry?

77%

If a minimum wage of $24 per hour was imposed on this labor market, there would be people who would be willing and able to work at this wage rate.

8900

Suppose the Texas legislature passes an increase in the state corporate profit tax, which incentivizes many general contracting firms to leave Texas and relocate in other states. The competitive labor market for construction workers in Texas would experience:

A decrease in labor demand and a decrease in the EQ wage rate

If the government imposes profit regulation on a Natural Monopoly firm, then the firm will be forced to charge customers a price equal to:

Average total cost

In the long run, a Monopoly firm:

Can continue to earn Economic Profit, unlike firms operating within a Perfectly Competitive Market.

An individual firm operating in a competitive labor market:

Can hire all the workers it desires at the market wage rate

In competitive labor market, when labor productivity rises, wages for workers:

Can increase without a decrease in the number of jobs available

The PapaBear Corporation is a single seller of WonderStuff, but there are two substitutes for WonderStuff. Given this situation, the PapaBear Corporation:

Can still be a Monopoly because it is unknown if the two substitutes are good, close substitutes

Deregulation of the airline industry has:

Caused the industry to become more concentrated in most regions

A Monopolistically Competitive firm maximizes Total Profit (or minimizes Total Loss) in the short run by:

Charging its customers a price based on the height of the product's demand curve.

Which of the following is the best example of price discrimination by the only 10- minute oil change business in town?

Charging women a lower price to service their vehicles, simply because it is Tuesday.

Which of the following is the best example of price discrimination by the only 10-minute oil change business in town?

Charging women a lower price to service their vehicles, simply because it is Tuesday.

All of the following are classic examples of Natural Monopoly except:

College campus bookstores

Which of the following is most likely to be a Monopoly firm?

Comcast, which possesses the single franchise license to provide cable television service in Tallahassee.

Monopoly definition

Complete control of a product or business by one person or group

Which of the following markets has not yet been subject to substantial deregulation?

Computers.

A Monopoly firm is currently producing a level of output where MR = MC. The firm's is AVC = $35 and ATC = $40. If the Monopoly is currently charging its customers a price of $50 per unit, then it should:

Continue producing this level of output and earn an above-normal amount of economic profit.

A Monopoly firm is currently producing a level of output where MR = MC. The firm's is AVC = $20 and ATC = $22. If the Monopoly is currently charging its customers a price of $21 per unit, then it should:

Continue producing this level of output to minimize its economics loss.

Which of the following is not a regulatory option when the government is trying to prevent market failure in the case of a Natural Monopoly?

Cost regulation.

When a telecommunication company uses the money from long-distance service to lower the price for local service, it engages in:

Cross-subsidization

The purpose of industry concentration indicators like the Herfindahl-Hirshman Index is to provide the US Justice Department with a convenient way to:

Decide which proposed mergers and acquisitions to challenge based on changes in the structure of a market,

The purpose of industry concentration indicators like the Herfındahl-Hirshman Index is to provide the US Justice Department with a convenient way to:

Decide which proposed mergers and acquisitions to challenge based on changes in the structure of a market.

When a firm hires additional workers, the Marginal Physical Product (MPP) of labor will eventually:

Decrease because each worker now has less capital and other resources to work with

The term economies of scale refers to the:

Decrease in minimum average costs due to an increase in factory size and capital equipment.

Market Power leads to Market Failure when it results in:

Decreased market output.

Firms (and their owners) operate on the side of the Labor Market and on the side of the Product Market.

Demand; Supply

In America, antitrust laws are designed to prevent firms from earning economic profits.

False

In Monopolistic Competition, each firm competes with other firms producing identical products.

False

In Monopolistic Competition, if an individual firm makes small changes in its price or output level, it will influence the market shares of other firms in the market.

False

Monopoly firms can charge any price and sell any amount of output they want since no competition exists.

False

There are many prices compatible with the Monopoly firm's profit-maximizing rate of output.

False

The term product differentiation refers to:

Features that make one product appear different from competing products in the same market,

Brand loyalty implies that consumers will:

Frequently shun substitute goods even when they are cheaper

The study of decision making in situations where strategic interaction between rival firms occurs is known as:

Game theory.

Government failure occurs when:

Government intervention fails to improve economic outcomes.

When market outcomes improve after government regulation is enforced:

Government intervention still may not be justified if the economic costs are too high.

Compared with the profit-maximizing choice of a Natural Monopoly firm, any type of economic regulation by government will result in the Natural Monopoly firm producing a:

Higher level of output and charging customers a lower price

If an Oligopoly firm is considering making a change to its price or output level, the Oligopoly firm's initial concern is:

How rival firms may respond to the change in price or output level

In the real world, the society must choose between:

Imperfect markets and imperfect government intervention

As an individual works more hours, the marginal utility of leisure time tends to:

Increase

As more hours are worked, the marginal utility of leisure time tends to:

Increase

If a Monopoly firm is producing a level of output where Marginal Revenue (MR) exceeds Marginal Cost (MC), then the firm should:

Increase its level of output and reduce its price

If an Oligopoly firm expands its market share at prevailing prices, its competitors are likely to:

Increase their own marketing efforts.

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

Inelastic; few

One of the main differences between an Oligopoly and a Monopolistically Competitive firm is that a Monopolistically Competitive firm:

Is relatively independent, but an Oligopoly firm is interdependent

A Natural Monopoly is a desirable market structure because:

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

How is the equilibrium wage rate determined in a competitive labor market?

It is determined by the interaction between Market Labor Demand and Market Labor Supply.

What potential drawback is associated with the government's use of profit regulation?

It may lead to bloated production costs.

What potential drawback is associated with the government's use of output regulation?

It may lead to the deterioration of product quality.

What potential drawback is associated with the government's use of price regulation?

It may require government subsidies to prevent the firm from exiting the market.

What potential drawback is associated with the government's use pf price regulation?

It may require government subsidies to prevent the firm from exiting the market.

Which of the following describes a way that society can benefit when monopoly is present?

It provides greater financial ability to fund research and development.

Refer to Figure 11.3. If an Oligopoly firm is producing at the kink in its demand curve and it decides to decrease its price, according to the kinked-demand model:

Its market share will not be affected,

The quantities of labor that employers are willing and able to hire at alternative wages in a given time period, ceteris paribus, is what Economists refer to as:

Labor Demand

The willingness and ability to work specific amounts of time at alternative wage rates in a given time period, ceteris paribus, is what Economists refer to as:

Labor Supply

If Oligopoly firms start cutting prices to capture a larger market share, the result will be:

Lower prices, increased output, and smaller profits.

Marginal Revenue Product (MRP) for workers hired in a competitive labor market is equal to:

MPP times the price of the product made by the worker.

For a Monopoly firm, the profit-maximizing rate of output occurs where:

MR = MC

How do we calculate a firm's Marginal Revenue (MR)?

MR = change in Total Revenue divided by the change in the quantity of output sold

If the government imposes price regulation on a Natural Monopoly firm, then the firm will be forced to charge customers a price equal to:

Marginal cost

The Natural Monopoly's preferred outcome violates the competitive principle of:

Marginal cost pricing.

The Natural Monopoly's preferred outcome violates the competitiverprinciple of:

Marginal cost pricing.

If a laissez faire approach (meaning, unregulated by government) is taken toward Natural Monopoly, then the Natural Monopoly firm will produce a quantity of output at which:

Marginal revenue equals marginal cost

When firms have the ability to restrict output, raise prices, stifle competition, and inhibit innovation the market failure involved is:

Market power

Oligopoly firms have a mutual interest in coordinating production decisions in order to:

Maximize the industry's Total Profit

Which of these real-world firms is most likely to operate in a market characterized by Monopolistic Competition?

McDonald's

If there are many firms in an industry producing goods that are similar but slightly different, this is an example of:

Monopolistic Competition

If the Income Effect dominates the Substitution Effect at all wage rates, then the individual's labor supply curve will be:

Negatively sloped

Suppose you are told that the MPP of an additional worker is 12 units of output per hour. The output produced by workers is sold to customers at a price of $3 per unit. The current market wage rate for workers in this occupation is $40 per hour. Under these conditions, should the firm employ an additional worker?

No, since the market wage rate is greater than the worker's MRP.

What is the Marginal Revenue Product (MRP) the third hair stylist?

O $1,000 per week

The equilibrium wage rate in this competitive labor market is:

O $16 per hour

Suppose you are told that the MPP of an additional worker is 9 units of output per hour. The output produced by workers is sold to customers at a price of $2 per unit. The current wage rate for workers in this occupation is $18 per hour. The Marginal Revenue Product (MRP) of this worker is:

O $18 per hour

This individual works the greatest number of hours when her wage rate is:

O $20 per hour (look for # of hours worked go to furthest)

The optimal price (P) for this Monopolistically Competitive firm to charge customers is:

O $21 per unit of output

The optimal price (P*) for this Monopoly firm to charge customers is:

O $22 per unit of output

The optimal price (P*) for this Monopoly firm to charge customers is:

O $35 per unit of output

The optimal price (P*) for this Monopolistically Competitive firm to charge customers is:

O $35 per unit of output(follow line to highest bullet)

The optimal price (P*) for this Monopolistically Competitive firm to charge customers is:

O $70 per unit of output

The equilibrium wage rate in this competitive labor market is:

O $9 per hour

The optimal quantity of output (Q*) for this Monopoly firm to produce is:

O 120k units of output

The optimal quantity of output (q*) for this Monopolistically Competitive firm to produce is:

O 1700 units of output(look for mr=mc point )

If a minimum vuge of $12 per hour was imposed on this labor market, business owners would be willing to hire people at this wage rate.

O 1700(look for 12$ then put closest bullet)

This individual works how many hours when her wage rate is $28 per hour?

O 18 hours per week(look for 28$ on wage rate)

In the US the federal minimum wage was instituted in the year in order to ensure:

O 1938; a basic standard of living for workers.

In the US, the federal minimum wage was instituted in the year in order to ensure:

O 1938; a basic standard of living for workers.

What is the value of the Herfindahl-Hirshman Index (HHI) for the Pool Cleaning Industry? NOTE: This is where you use those numbers you wrote down earlier!

O 2,750

The optimal quantity of output (Q") for this Monopoly firm to produce is:

O 240k units of output

What is the market share for Hurricane Pool Cleaners?

O 25%(5000/20000)

If a minimum wage of $12 per hour was imposed on this labor market, there would be people who would be willing and able to work at this wage rate.

O 2700(find $12, go to second bullet)

The optimal quantity of output (q*) for this Monopolistically Competitive firm to produce is:

O 350 units of output(find mr=mc line)

The optimal quantity of output (Q*) for this Monopoly firm to produce is:

O 45k units of output

Suppose a hair stylist is paid $250 per week. How many hair stylists should a profit- maximizing salon owner hire?

O 5 hair stylists

What is the market share for Liam's Lawn Service?

O 8%

Suppose the "delta variant" of COVID-19 causes half the Texas workforce to get sick and die. The competitive labor market for construction workers in Tekas would experience:

O A decrease in labor supply and an increase in the EQ wage rate

When considering the supply of labor, the Substitution Effect claims that:

O A higher wage rate encourages people to work more hours.

The price charged by a profit-maximizing Monopoly firm is found at:

O A price on the demand curve above the intersection where MR = MC.

Each individual firm in a market characterized by Monopolistic Competition has:

O A small degree of market power

If a minimum wage of $12 per hour were imposed on this labor market:

O A surplus of 1,000 workers would emerge

If a minimum wage of $24 per hour were imposed on this labor market:

O A surplus of 6,400 workers would emerge

When the firm produces Q* units of output, how much does it cost to produce the typical unit of output?

O ATC - $39

When the firm produces q* units of output, how much does it cost to produce the typical unit of output?

O ATC = $29( look for atc line that passes 350quantity line)

When the firm produces Q* units of output, how much does it cost to produce the typical unit of output?

O ATC = $48

If the government imposes profit regulation on a Natural Monopoly firm, then the firm will be forced to charge customers a price equal to:

O Average total cost

Statement 1: Marginal Revenue Product (MRP) is a reflection of the economic value of a worker to the firm. Statement 2: Marginal Revenue Product (MRP) establishes an upper limit to the wage rate that a firm will pay to a worker.

O Both statements are correct.

Statement 1: In an Oligopoly market, other firms will not notice if one firm experiences increased sales. Statement 2: An increase in the market share of one Oligopoly firm will not affect the market shares of the other firms in the industry.

O Both statements are incorrect.

Assume the apple market is competitive. If citizens want wages and the number of available jobs for apple pickers to increase, the best strategy would be to:

O Buy more apples.

An individual firm operating in a competitive labor market:

O Can hire all the workers it desires at the market wage rate

Deregulation of the airline industry has:

O Caused the industry to become more concentrated in most regions

A Monopolistically Competitive firm maximizes profits or minimizes losses in the short run by:

O Charging its customers a price based on the height of the product's demand curve.

A firm can achieve product differentiation through:

O Clever labeling OA better location O Advertising O All of the above

All of the following are examples of Natural Monopoly EXCEPT:

O College campus bookstores

Which of the following markets has not been subject to substantial deregulation?

O Computers.

Which of the following is NOT a legal barrier to entry?

O Control over essential resources used in production

When a telecommunication company uses the money from long-distance service to lower the price for local service, it engages in:

O Cross-subsidization

The current market price of output is $10 and 2,000 units of output are sold to customers. If we assume that rival firms match price decreases but not price increases, the Oligopoly firm's demand curve will most likely be:

O D2ED1

If a Monopoly firm is producing a level of output where Marginal Cost (MC) exceeds Marginal Revenue (MR), then the firm should:

O Decrease its level of output and increase its price

If an Oligopoly firm attempts to increase its own sales by reducing its price, its competitors are likely to:

O Decrease their own prices as well.

If a worker's contribution to the output of a firm is difficult to measure (like with a college professor or corporate CEO), an appropriate wage rate can be determined by:

O Documenting the wage rate the person could receive in his best alternative job.

The distinctive characteristic of a Natural Monopoly firm is its:

O Downward-sloping average total cost curve.

When Oligopoly firms collude to raise prices:

O Each Oligopoly firm benefits, but society loses

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

O Elastic: many

The industry that is the most recent target of deregulation is the:

O Electric utility industry

A Monopoly firm is guaranteed to earn above-normal amounts of economic profit in the short run. After all, it is the single seller of a unique product for which many customers believe there are few good available substitutes.

O False

In Monopolistic Competition, each firm competes with other firms offering identical products.

O False

Output regulation forces the Natural Monopoly firm to produce at an output:

O Greater than its profit-maximizing choice.

Compared with the profit-maximizing choice of a Natural Monopoly firm, any type of economic regulation by government will result in the Naural Monopoly firm producing a:

O Higher level of output and charging customers a lower price

Compared to a competitive market, a Monopoly firm charges its customers a price and produces a _______ price and produces a ________total quantity of output.

O Higher; smaller

Compared to a competitive market, a Monopoly firm charges its customers a price and produces a total quantity of output.

O Higher; smaller

In the real world, the society must choose between:

O Imperfect markets and imperfect government intervention

If an Oligopoly firm expands its market share at prevailing prices, its competitors are likely to:

O Increase their own marketing efforts.

A Monopoly firm can take advantage of economies of scale through:

O Investment decisions to increase output capacity.

One of the main differences between an Oligopoly and a Monopolistically Competitive firm is that a Monopolistically Competitive firm:

O Is relatively independent, but an oligopoly firm is interdependent

What potential drawback is associated with the government's use of output regulation?

O It may lead to the deterioration of product quality.

Refer to Figure 11.3. If an Oligopoly firm is producing at the kink in its demand curve and it decides to increase its price, according to the kinked-demand model:

O It will lose market share to the firms that do not follow the price increase.

The quantities of labor employers are willing and able to hire at alternative wages in a given time period, ceteris paribus, is what Economists refer to as:

O Labor Demand

In the long run, firms operating within a Monopolistically Competitive market will be:

O Less efficient than firms operating within a Perfectly Competitive market.

The Marginal Revenue of a Monopoly firm is always____________the price charged to customers because:

O Less than; price must be reduced in order to sell a larger quantity of output.

The competitive dimension of Monopolistic Competition is that:

O Low barriers to entry and exit will push economic profits toward zero over time

If a laissez faire approach is taken toward Natural Monopoly, then the Natural Monopoly firm will produce a quantity of output at which:

O Marginal revenue equals marginal cost

If an Oligopoly market is contestable and new firms enter, the:

O Market power of the existing firms will be reduced

For this individual, over which wage rate range does the Substitution Effect dominate her labor supply choice?

O Over the $0 to $20 per hour wage rate range( look at lower half of graph )

Which of the following functions as a barrier to entry into an Oligopoly market?

O Patents. The expense involved in non-price competition. O Control of distribution outlets, All of the above.

There are many corn farmers, each of whom produces the same product. The corn market can best be classified as:

O Perfect Competition

The pricing strategy in which temporary price reductions are used to drive out competition, or prevent new competition from entering, is called:

O Predatory pricing

The term Marginal Cost Pricing means that goods should be supplied in quantities such that:

O Price equals marginal cost.

The pricing strategy in which one firm (usually the largest firm) is allowed by its rivals to establish the market price for all firms in the market is called:

O Price leadership

If the government forced Profit Regulation on this Natural Monopoly, then the firm would be forced to choose which combination of price and output?

O Price of $10 per unit and quantity of 1500 units

To maximize Total Profit, an unregulated Natural Monopoly firm would choose to produce which combination of price and output?

O Price of $14 per unit and quantity of 1000 units

If the government forced Price Regulation on this Natural Monopoly, then the firm would be forced to choose which combination of price and output?

O Price of $8 per unit and quantity of 2200 units

A Monopolistically Competitive firm maximizes profits or minimizes losses in the short run by:

O Producing output at the level where MC = MR.

When a firm advertises that its product has unique features that make it superior to other similar products, it is engaging in:

O Product differentiation

A regulated Natural Monopoly is more likely to advertise freely under which of the following types of regulation?

O Profit regulation.

In this graph of a Monopoly firm, what is the profit-maximizing level of output to produce and what price will be charged to customers?

O Q* = 20 units of output; p = $10 per unit

Assume there is only one flower shop in town, so that the industry is classified as a Pure Monopoly. How many flower bouquets would be produced this month, and what price would be charged to customers?

O Quantity = 500 flower bouquets; Price = $16 per flower bouquet

Now assume there is a large number of small flower shops in town (all producing the same type of flower bouquets), so that the industry is classified as Perfectly Competitive. In total, how many flower bouquets would be produced this month, and what price would be charged to customers?

O Quantity = 600 flower bouquets; Price = $13 per flower bouquet

Deregulation of the railroad industry led to:

O Reconfigured routes and services.

When Economists say that the demand for labor is a derived demand, they mean that it is:

O Related to the demand for the good or service that labor is producing.

From society's perspective, collusion is undesirable and illegal because:

O Resources are misallocated and the level of market output is restricted.

Which of the following is a danger of experimenting with price for an Oligopoly firm?

O Retaliation. O Price wars. O The uncertainty of competitor response. O All of the above.

The demand curve for the product produced in an Oligopoly market will be kinked if:

O Rival firms match price reductions but not price increases.

The demand curve for the product produced in an Oligopoly market will be kinked if:

O Rival fırms match price reductions but not price increases.

Based on the graph, the Income Effect is shown by:

O Segment bc

If some existing firms choose to exit from Monopolistically Competitive market, then in the long run, the demand curves for the output of the remaining firms will:

O Shift to the right and output prices begin to rise

Deregulation of the cable TV market by the Telecommunications Act of 1996 resulted in:

O Significantly higher prices for consumers.

If a Natural Monopoly firm was broken into several smaller competing firms:

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

If the government applied Output Regulation to this Natural Monopoly, then the firm would be forced to produce which level of output?

O Some quantity of output between 1000 units and 1500 units

If the government forced Output Regulation on this Natural Monopoly, then the firm would be forced to produce which level of output?

O Some quantity of output between 1000 units and 1500 units

When the minimum wage is raised in a competitive labor market:

O Some workers are better off and some are worse off.

The Herfindahl-Hirshman Index (HHI) is the sum of the:

O Squared market shares of all of the firms in a particular market.

Statement 1: A Monopoly occurs when one firm produces the entire market supply of a good or service. Statement 2: Although there are other pizza restaurants in town, Primo's Pizza Palace is the largest and therefore is a Monopoly.

O Statement 1 is correct and Statement 2 is incorrect.

Statement 1: Marginal cost pricing means that goods are offered for sale at prices equal to their marginal cost. Statement 2: In the long run, Monopolistically Competitive firms use marginal cost pricing.

O Statement 1 is correct and Statement 2 is incorrect.

Statement 1: A Monopoly firm can charge any price that it wants and sell any amount of output that it wants to sell at that price, since no competition exists. Statement 2: A Monopoly firm's pricing power is constrained by the Law of Demand, just like any other type of firm.

O Statement 1 is incorrect and Statement 2 is correct,

Statement 1: Advertising cannot serve as a barrier to entry because any firm can advertise its product. Statement 2: Advertising makes it expensive for new firms to enter an industry.

O Statement 1 is incorrect and Statement 2 is correct.

Statement 1: When market outcomes improve after government regulation is enforced, the net effect of government intervention on society is definitely beneficial. Statement 2: When market outcomes improve after government regulation is enforced, government intervention still may not be justified if it imposes too high of a cost on society.

O Statement 1 is incorrect and Statement 2 is correct.

For the typical individual, his/her labor supply curve slopes upward initially, and then bends backward. In the upward-sloping portion of the curve, the:

O Substitution effect outweighs the income effect.

A major drawback of providing subsidies to private companies that are Natural Monopolies is that:

O Taxpayers dislike this use of their tax dollars.

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

O The Clayton Act

Which of the following created a new agency to study industry structure and behavior so as to identify anticompetitive practices?

O The Federal Trade Commission Act

When some existing firms choose to exit from a Monopolistically Competitive market, then in the long run:

O The Market Supply curve shifts to the left and output prices begin to rise.

When new firms enter a Monopolistically Competitive market, then in the long run:

O The Market Supply curve shifts to the right and output prices begin to fall.

Which of these statements about the demand curve of a Monopoly firm is FALSE?

O The Monopoly firm's demand curve is characterized as perfectly inelastic.

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

O The Sherman Act

The costs associated with the employment of thousands of workers by the federal government regulatory agencies are an example of:

O The administrative costs of regulation

The government's use of economic regulation focuses on altering:

O The behavior of the firm(s) within an industry

Suppose Delta Airlines hires three new lawyers to keep the company informed regarding new federal government regulations that apply to the airline industry. The salaries of these three new lawyers represent:

O The compliance costs of regulation

When a Monopolistically Competitive firm advertises, it is attempting to increase:

O The demand for its version of the product and make that demand more inelastic.

When the regulatory process itself becomes a drag on economic growth, society experiences:

O The efficiency costs of regulation

A Natural Monopoly occurs because of:

O The existence of economies of scale.

In a competitive labor market, the firm's demand curve for labor is:

O The marginal revenue product curve

According to page 237 of the Required Course Textbook, which of these markets has the highest Concentration Ratio?

O The market for video game consoles

In a competitive labor market, an individual firm should continue to hire workers up to the point where:

O The next worker's Marginal Revenue Product = the market wage rate.

The determinants of market power include:

O The number of firms in the market The availability of substitute goods The size of each firm in the market All of these are determinants of market power

Firms in Oligopoly markets have a more difficult time applying the profit- maximization rule than firms in other markets because:

O The shape of the firm's demand curve depends on the decisions of rival firms

Even if a market is not competitive, the firms in the market may behave competitively if:

O The threat of potential competition exists.

When U.S. government regulations that prevent foreign goods from being imported are relaxed:

O This reduces the barriers to entry into U.S. markets.

To maintain market power, firms will sometimes purchase their competitors.

O True

What's more valuable: more money or more time to enjoy your life? According to the survey on page 338 of your textbook, a majority people who live in and would prefer more money, and a majority of people who live in and would prefer more time to enjoy life.

O US and Japan; Mexico and India

What is the Marginal Physical Product (MPP) of the second hair stylist?

O50 appointments per week

According to the textbook, the reward from working comes in two forms. They are:

OA paycheck and satisfaction from working

Market Power leads to Market Failure when it results in:

ODecreased market output.

When government regulation results in the production of an inferior mix of output, there are:

OEfficiency costs.

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

OElastic; many

The willingness and ability to work specific amounts of time at alternative wage rates in a given time period, ceteris paribus, is what Economists refer to as:

OLabor Supply

Which market structure is characterized by a few interdependent firms?

Oligopoly

Based on the graph, we see that this person is willing to supply hours of labor at wage rate W2 than at W, and hours of labor at wage rate W3 than at W2.

Omore; fewer

Concentration Ratios tend to overstate the power of some corporations to influence economic outcomes because they measure output:

Only for domestic production, when the true market boundaries are international for some markets.

The Concentration Ratio (CR) measures the:

Percentage of total industry output produced by the four largest firms in a specific market.

Which of the following market structures is characterized by the absence of market power?

Perfect Competition

If the Substitution Effect dominates the Income Effect at all wage rates, then the individual's labor supply curve will be:

Positively sloped

The pricing strategy in which one firm (usually the largest firm) is allowed by its rivals to establish the market price for all firms in the market is called:

Price leadership

The pricing strategy in which there is an explicit agreement among producers to reduce the quantity of output produced and raise the price charged to customers is called:

Price-fixing

The pricing strategy in which there is an explicit agreement among producers to reduce the quantity of output produced and raise the price to customers is called:

Price-fixing

A Monopoly firm is currently producing 500 units of output per day and charging customers a price of $48 per unit. At this output level, the firm's MC = $25, MR = $20 and ATC = $51. This Monopoly firm should:

Produce less than 500 units of output and charge customers a price greater than $48 per unit in order to decrease the size of its Total Loss.

A Monopoly firm is currently producing 200 units of output per day and charging customers a price of $30 per unit. At this output level, the firm's MC = $14, MR = $18 and ATC = $25. This Monopoly firm should:

Produce more than 200 units of output and charge customers a price less than $30 per unit in order to increase the size of its Total Profit.

A Monopolistically Competitive firm maximizes Total Profit (or minimizes Total Loss) in the short run by:

Producing output at the level where MC =MR.

The key characteristic of Monopolistic Competition is:

Product differentation

A regulated Natural Monopoly is more likely to advertise freely under which of the following types of regulation?

Profit regulation.

Firms operating in a market characterized by Monopolistic Competition__________ to develop brand loyalty, which makes demand for the individual firm's product _________price elastic.

Put forth significant effort; less

Quantity = 1,100 flower bouquets; Price = $18 per flower bouquet

Quantity = 900 flower bouquets; Price $23 per flower bouquet

The first major regulatory target in the United States was:

Railroads

Deregulation of the railroad industry led to:

Reconfigured routes and services.

The term economies of scale refers to the:

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

According to the Required Course Textbook, which of the government's policy options is almost always used when dealing with Natural Monopoly?

Regulation

The case for deregulation rests on the argument that:

Regulations are more costly to implement than the market failure that is to be corrected.

When Economists say that the demand for labor is a derived demand, they mean that it is:

Related to the demand for the good or service that labor is producing.

When Oligopoly firms coordinate their production decisions, the market demand curve for the product they produce will be:

Relatively inelastic, like that of a Monopoly firm

Customers of Monopolistically Competitive firms will pay more for products than they would if the same products were sold in a Perfectly Competitive market structure. This higher price:

Represents the value that consumers place on product differentiation and innovation

Customers of Monopolistically Competitive firms will pay more for products than they would if the same products were sold ina Perfectly Competitive market structure. This higher price:

Represents the value that consumers place on product differentiation and innovation

The collapse of AT&T's Natural Monopoly in long distance telephone service was caused by:

Satellite technology which made it easier and less expensive for new companies provide long-distance service.

Based on the graph, the Substitution Effect is shown by:

Segment ab

If new firms enter a Monopolistically Competitive market, then in the long run, the demand curves for the output of existing firms will:

Shift to the left and output prices begin to fall

If new firms enter a Monoponstically Competitive market, then in the long run, the demand curves for the output of existing firms will:

Shift to the left and output prices begin to fall

Market Supply of Labor def

Shifts to the right when more workers enter the labor market.

Deregulation of the cable TV market by the Telecommunications Act of 1996 resulted in:

Significantly higher prices for consumers.

If a Natural Monopoly firm was broken into several smaller competing firms:

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

Statement 1: If Amber is willing to work additional hours if her wage rate increases, the substitution effect must outweigh the income effect. Statement 2: If Isabel is willing to work fewer hours if her wage rate increases, the substitution effect must outweigh the income effect.

Statement 1 is correct and Statement 2 is incorrect.

Statement 1: The market supply of labor represents the sum of all individual labor supply decisions. Statement 2: Like individual labor supply curves, the market supply of labor curve can be negatively sloped.

Statement 1 is correct and Statement 2 is incorrect.

Statement 1: A Monopoly firm does not have to obey the Law of Demand. Statement 2: The ultimate constraint on the Monopoly firm's use of market power is the Market Demand Curve.

Statement 1 is incorrect and Statement 2 is correct.

Statement 1: Advertising cannot serve as a barrier to entry because any firm can advertise its product. Statement 2: Advertising makes it expensive for new firms to enter an industry.

Statement 1 is incorrect and Statement 2 is correct.

Statement 1: In Monopolistic Competition, if an individual firm makes modest changes in its price or output, it will influence the market shares of other firms in the market. Statement 2: In Monopolistic Competition, modest changes in the output or price of any individual firm will have no significant influence on the market shares of other firms.

Statement 1 is incorrect and Statement 2 is correct.

Households (groups of consumers) operate on the side of the Labor Market and on the side of the Product Market.

Supply: Demand

Households (groups of consumers) operate on the side of the Labor Market and on the - side of the Product Market.

Supply; Demand

When the firm produces Q* units of output, how much does it cost to produce the typical unit of output?

Take an economic loss in the future

Under these market conditions, this Monopoly firm will:

Take an economic loss in the short run

A major drawback of providing subsidies to private companies that are Natural Monopolies is that:

Taxpayers dislike this use of their tax dollars.

The electric utility industry became a target for deregulation when

Technological advances destroyed the basis for natural monopolies in power production.

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 folowing created a new agency to study industry structure and behavior se as to identify anticompetitive practices?

The Federal Tale Commision Act

When some existing firms choose to exit from a Monopolistically Competitive market, then in the long run:

The Market Supply curve shifts to the left and output prices begin to rise.

Which of the following describes a way that society can benefit when monopoly is present?

The Monopoly fırm potentially has a greater financial ability to fund research and development.

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

The Sherman Act

Marginal Physical Product def

The additional output gained from employing one more unit of some input.

The concept of Marginal Physical Product (MPP) is designed to measure:

The additional output produced when the firm adds the next worker to its production process

The term Cost Efficiency refers to the:

The amount of additional output produced when an extra dollar is spent on a resource.

The government's use of economic regulation focuses on altering:

The behavior of the firm(s) within an industry

Marginal Revenue (MR) measures:

The change in total revenue resulting from a one-unit unit change in the quantity of output sold.

Which regulatory cost is borne by the firms that are regulated?

The compliance costs of regulation

When the regulatory process itself becomes a drag on economic growth, society experiences:

The efficiency costs of regulation

Which of the following is the most critical determinant of market power?

The extent of barriers to entry.

Assume that a Monopolistically Competitive firm faces the following situation: P = $35, output = 13,000 units, MC = $21, ATC = $42, AVC = $32 and MR = $21. Which of these statements is correc? HINT: The CH 8 Informational McNugget Table would be quite helpful here!

The firm should continue producing 13,000 units of output, since it is currently minimizing the size of its Economic Loss by producing output.

Assume that a Monopolistically Competitive firm faces the following situation: P = $40, output = 18,000 units, MC = $28, ATC = $50, AVC = $37 and MR = $28. Which of these statements is correct? HINT: The CH 8 Informational McNugget Table would be quite helpful here!

The firm should continue producing 18,000 units of output, since it is currently minimizing the size of its Economic Loss by producing output.

Assume that a Monopolistically Competitive firm faces the following situation: P = $17, output = 20,000 units, MC = $8, ATC = $17, AVC = $11 and MR = $8. Which of these statements is correct?

The firm should continue producing 20,000 units of output, since it is currently earning a Normal amount of Economic Profit

Assume that a Monopolistically Competitive firm faces the following situation: P = $22, output = 26,000 units, MC = $14, ATC = $22, AVC = $16 and MR = $14. Which of these statements is correct?

The firm should continue producing 26.000 units of output, since it is currently earning a Normal amount of Economic Profit

Assume that a Monopolistically Competitive firm faces the following situation: P = $21, output 35,000 units, MC = $13, ATC $16, AVC = $11 and MR = $13. Which of these statements is correct?

The firm should continue producing 35,000 units of output, since it is currently earning an Above-normal amount of Economic Profit.

Assume that a Monopolistically Competitive firm faces the following situation: P = $14, output = 9,000 units, MC = $11, ATC = $10, AVC = $7 and MR = $11. Which of these statements is correct? HINT: The CH 8 Informational McNugget Table would be quite helpful here!

The firm should continue producing 9,000 units of output, since it is currently earning an Above-normal amount of Economic Profit.

Suppose a U.S. automotive manufacturer was considering moving to Mexico to take advantage of the lower wage rates for unskilled Mexican labor. The typical Mexican worker could produce twenty cars per day, while the firm's typical U.S. worker can produce fifty cars per day. If the firm currently pays its U.S. workers an hourly wage of $25, economic theory suggests that

The firm should move to Mexico only if the Mexican hourly wage is less than $10.(write it down, 25is 2x to 50 so Mexican worker needs 10x to make 20 double)

Assume that a Monopolistically Competitive firm faces the following situation: P = $14, output = 12,000 units, MC = $6, ATC = $20, AVC = $16 and.MR = $6. Which of these statements is correct? HINT: The CH 8 Informational McNugget Table would be quite helpful here!

The firm should shut down immediately to minimize the size of its Economic Loss.

Assume that a Monopolistically Competitive firm faces the following situation: P = $18, output = 8,000 units, MC = $7, ATC = $25, AVC = $20 and MR = $7. Which of these statements is correct?

The firm should shut down immediately to minimize the size of its Economic Loss.

Which of the following is the same for a Monopoly firm and a Perfectly Competitive firm, when operating under the same cost and demand conditions?

The goal of maximizing Total Profit.

In 1890, the average worker in the US was employed for 60 hours per week at an average hourly wage rate of $0.20. Today, the typical worker in the US is employed for approximately 34 hours per week at an average hourly wage rate of $18.00. According to the Required Course Textbook, what explains this interesting observation?

The growth of income transfer programs has made is less costly to be a non-working American.

Based on the table, what must be TRUE about the labor supply curve as the wage rate rises from $40 to $50 per hour?

The income effect dominates the substitution effect

If the price reductions of one Oligopoly firm are matched by other Oligopoly firms, then:

The industry moves toward the southeast along the Market Demand Curve

In a competitive labor market, the individual fırm's demand curve for labor is:

The marginal revenue product curve

According to Table 11.2, which of these markets is likely to have the highest Concentration Ratio?

The market for video game consoles

If an Oligopoly market is contestable and new firms enter:

The market power of the existing firms will be reduced

Which of the following is likely to occur if a Monopoly firm suddenly loses its ability to deny potential competing firms entry into the market?

The market price of the product will fall.

In a competitive labor market, an individual firm should continue to hire workers to the point where:

The next worker's Marginal Revenue Product= the market wage rate.

The demand curve faced by a Monopoly firm is:

The same as the Market Demand Curve

Firms in Oligopoly markets have a more difficult time applying the profit- maximization rule than firms in other markets

The shape of the firm's demand curve depends on the decisions of rival firms

The government's use of antitrust laws focuses on altering:

The structure of industry The behavior of the firm(s) within an industry Both A and B

Based on the table, what must be TRUE about the labor supply curve as the wage rate rises from $20 to $30 per hour?

The substitution effect dominates the income effect

The concept of Marginal Revenue Product (MRP) is designed to measure:

The value of the additional output produced when the firm adds the next worker to the production process

Which of the following is NOT a determinant of the Market Supply of Labor?

The wage rate

Which of the following is true about the equilibrium wage in the labor market?

There is no unemployment in this market at the equilibrium wage.

A Monopoly occurs when one firm produces the entire market supply of a good or service.

True

According to Figure 11.3, the kinked demand curve is really a composite of two separate demand curves.

True

Buyers cannot easily substitute other products for those produced and sold by a Monopoly firm.

True

Colluding Oligopoly firms face the conflict between maximizing industry profit or their own firm's market share.

True

Firms operating in a market characterized by Monopolistic Competition will put forth significant amounts of effort to develop brand loyalty

True

From society's perspective, collusion is undesirable and illegal because resources are misallocated and the level of market output is restricted.

True

In America, antitrust laws protect both consumers and small businesses.

True

OPEC is an example of a cartel in which the member countries set price and output targets for oil production.

True

One symptom of the inefficiencies associated with Monopolistic Competition is industry-wide excess capacity.

True

Patents and copyrights are intended to encourage innovation and creativity by temporarily giving the creator Monopoly rights.

True

Potential competition restrains the behavior of Monopoly firms in a Contestable Market.

True

The Kinked Demand Curve is the result of different responses by rival firms to price increases and price reductions.

True

Which of the following is an example of product differentiation?

Two shampoos differ only in their label, but consumers pay $1.00 more for the label they recognize.

For an individual, the opportunity cost of working is the:

Value of leisure time that must be given up in order to work.

Law of Diminishing Returns def

When additional units of a variable input are added to fixed inputs after a certain point, the marginal product of the variable input declines.

The monopoly dimension of Monopolistic Competition is that an individual firm:

Will be able to keep many customers if it raises the price of its product

The monopoly dimension of Monopolistic Competition is that an individual firm:

Will keep many of its customers if it raises the price of its product

Suppose you are told that the MPP of an additional worker is 9 units of output per hour. The output produced by workers is sold to customers at a price of $2 per unit. The current market wage rate for workers in this occupation is $18 per hour. Under these conditions, should the firm employ an additional worker?

Yes, since the worker's MRP is greater than or equal to the market wage rate.

Market Share def

a company's product sales as a percentage of total sales for that industry

Economic Profit def

a firm's total revenue minus its explicit and implicit costs

Cartel def

a group of firms acting in unison

Contestable Market def

a market in which firms can enter and leave so easily that firms in the market face competition from potential entrants

Derived Demand def

business demand that ultimately comes from the demand for consumer goods

How is the equilibrium wage rate determined in a competitive labor market?

determined by the interaction between Market Labor Demand and Market Labor Supply.

Which regulatory cost is borne by the firms that are regulated?

e The compliance costs of regulation

Over time, the unregulated Natural Monopoly firm will produce its output efficiently, earn an above normal amount of economic profit, and create an undesirable outcome for society.

inefficiently / an above normal amount of economic profit / an undesirable

Over time, the unregulated Natural Monopoly firm will produce its output inefficiently, earn Above-normal Economic Profit, and create An undesirable outcome for society.

inefficiently Above-normal Economic Profit An undesirable

Please refer to page 291 to help you complete the sentence provided below: Deregulation of the railroad, telephone, airline, and electricity industries has yielded substantial benefits: more competition lower prices , and improved services Such experiences bolster the case for laissez faire.

more competition lower prices improved services improved service

Product Differentiation def

real or imagined differences between competing products in the same industry

Marginal Revenue Product def

the change in total revenue associated with one additional unit of input

Opportunity Wage def

the highest wage a individual would earn in his or her best alternative job

Labor Supply def

the relationship between the quantity of labor supplied by individuals and the wage

Game Theory def

the study of how people behave in strategic situations, a person waiting to see how the other person will make their move

Equilibrium Wage def

the wage at which the quantity of labor firms demand exactly matches the quantity workers supply

What is the Marginal Revenue Product (MRP) of the fifth hair stylist?

$250 per week

When the firm produces q* units of output, how much Total Profit (or Total Loss) does it earn?

-$8,500 (21-26=-5 then -5x1700=-8500)

At the equilibrium wage rate, there are people who are unemployed.

What is the value of the Herfindahl-Hirshman Index (HHI) for the Tallahassee Lawn Service Industry?

1,858

What is the market share for Logan's Lawn Service?

30%

What is the market share for Leo's Lawn Service?

An increase in the "generosity" of welfare programs would cause:

A decrease in labor supply and an increase in the EQ wage rate

The government's use of antitrust laws focuses on altering:

Both A and B

As an individual earns additional income, the marginal utility of income tends to:

Decrease

In a market characterized as Monopolistic Competition, an individual firm's demand curve is tangent to hits ATC curve in the long run because:

Entry eliminates economic profit, and exit eliminates losses.

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

Inelastic: few

The Marginal Revenue of a Monopoly firm is always the price charged to customers because:

Less than; price must be reduced in order to sell a larger quantity of output.

The first major regulatory target in the United States was:

O Railroads

Market share is:

The percentage of total market output produced by a single firm in a specific market.

A Monopoly firm can maintain its market power for all of the following reasons EXCEPT:

The presence of many close substitutes for its product

Game Theory is:

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

Normal Profit def

a profit that allows a business to survive and grow

Price Fixing def

an agreement among firms to charge one price for the same good

regulation def

government intervention in a market that affects the production of a good

Antitrust def

laws that encourage competition in the marketplace

Profit Maximization Rule def

produce at that rate of output where marginal revenue equals marginal cost mr=mc

market power definition

the ability to alter the market price of a good or service

Demand for Labor def

the quantities of labor employers are willing and able to hire at alternative wage rates in a given time period

Market Surplus def

when the quantity supplied exceeds the quantity demanded

-$685

Suppose a Monopoly concrete contractor builds 20 driveways per month for $10,000 each. In order to increase sales to 21 driveways, the contractor must lower the price of driveways to $9,500 each. Calculate the Marginal Revenue (MR) of the 21st driveway. NOTE: If you think the answer is $8,250, then just enter 8250 into the box provided.

-500

According to the Required Course Textbook, firms in all of the following market have been accused of engaging in price fixing EXCEPT:

Baby formula

In a market characterized as Oligopoly, above-normal economic profit cannot be maintained in the long run unless:

Barriers to entry exist.

Statement 1: If the wage rate decreases, an employer will be willing to hire a larger quantity of workers, ceteris paribus. Statement 2: For wages to increase without sacrificing jobs, the labor productivity of workers must increase.

Both statements are correct.

Product differentiation occurs when:

Buyers, though not necessarily sellers, perceive differences in the products of several companies.

The demand curve faced by an individual Monopolistically Competitive firm is:

Downward sloping and relatively elastic

Firms with Market Power confront a:

Downward sloping demand curve for the output they produce.

Firms with market power confront a:

Downward sloping demand curve for the output they produce.

The distinctive characteristic of a Natural Monopoly firm is its:

Downward-sloping average total cost curve.

In a competitive labor market, the Market Labor Demand curve is --- sloping and the Market Labor Supply curve is sloping.

Downward; upward

In a competitive labor market, the Market Labor Demand curve is and the Market Labor Supply curve is sloping.

Downward; upward

When Oligopoly firms successfully collude to raise prices:

Each Oligopoly firm benefits, but society loses

Under these market conditions, this Monopoly firm will:

Earn an above-normal amount of economic profit in the short run

In the long run, firms operating within a Monopolistically Competitive market will:

Earn only a normal amount of economic profit, since barriers to entry cannot be maintained in this type of market

In the long run, firms operating within a Monopolistically Competítive market will:

Earn only a normal amount of economic profit, since barriers to entry cannot be maintained in this type of market

Reductions in minimum average costs that come about through increases in the size of factory space and capital equipment are called:

Economies of scale

The industry that is the most recent target of deregulation is the:

Electric utility industry

Please refer to page 291 to help you complete the sentence provided below: Nevertheless, we shouldn't jump to the conclusion that all regulation of business should be dismantled. All we know from experience is that the regulation of certain industries became outmoded, and simply made existing regulations obsolete, even

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