Econ Test 3 Chapters 10,11,13,16,19
In Figure 24.2, a profit-maximizing monopolist will charge a price of
$5.50
A patent gives a firm the exclusive right to produce a product for
20 years.
The bottom 80 percent of families in Alpha receive approximately what percentage of total income? (See Figure 33.1.)
50 percent.
Which of the following is likely to be a monopolist?
A drug firm that has a patent granting it the exclusive right to produce a drug.
Income is measured as
A flow only.
When the market does not lead to an optimal allocation of resources, there must be
A market failure.
Which of the following is a barrier to entry in a monopoly market?
A patent on a new product.
In Figure 24.1, total revenue is represented by the area
ABFE.
The most common form of nonprice competition is
Advertising
The major aim of government regulation is to
Alter industry behavior.
A barrier to entry is
An obstacle that makes it difficult for new firms to enter a market.
Which of the following is a form of government intervention that is designed to correct market failures?
Antitrust laws.
The market supply curve for labor curve is upward-sloping because
As the wage rises, most workers are willing to work more hours.
Monopolists set prices
At the output where marginal revenue equals marginal cost.
A monopoly
Charges higher prices than competitive firms, ceteris paribus.
All of the following are examples of natural monopolies except
College bookstores.
Figure 33.3 illustrate four different Lorenz curves. Assume Brazil has a larger Gini coefficient than the United States. If the income distribution for the United States is represented by curve C, which curve would most likely represent the income distribution for Brazil?
D.
If the demand for alarm clocks decreases, the effect on the alarm clock job market will be to
Decrease the demand for labor and reduce equilibrium wages.
A cartel is
A public agreement between firms or countries to restrict production and raise prices.
In Figure 24.1, the profit-maximizing monopolist will charge a price of
A.
If consumers decide to buy fewer strawberries, then the
Demand for strawberry pickers will fall.
When oligopoly firms collude to raise prices,
Each firm benefits, but society loses.
Which of the following is a barrier to entry in a monopoly market?
Economies of scale
Price leadership is a method by which oligopolies can
Increase prices without explicit price-fixing.
If the demand for hair gel increases, the effect on the hair gel manufacturing job market will be to
Increase the demand for labor and increase equilibrium wages.
In the United States between 2000 and 2013, the Gini coefficient
Increased, indicating greater income inequality.
In-kind benefits are a way of correcting
Inequity.
There is an inherent tendency of a monopoly industry to
Inhibit productivity advances.
If leisure activities become more attractive, there will be a
Leftward shift of the labor supply curve.
To maximize profit, a natural monopolist produces the level of output at which
Marginal revenue equals marginal cost.
Which of the following is an argument in favor of a competitive market structure rather than monopoly?
Monopolies produce less at a higher price than competitive markets, ceteris paribus.
The correct ranking of degree of market power (from highest to lowest) is
Monopoly, oligopoly, monopolistic competition, perfect competition
An individual's labor supply curve
Slopes upward initially, and then may bend backward.
A tax is progressive if it takes a
Smaller fraction of income as income falls.
In Figure 30.2, a minimum wage of $20 will result in a
Surplus of 32 workers.
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 following was the first to prohibit "conspiracies in restraint of trade"?
The Sherman Act.
The market supply of labor is
The amount of labor all workers supply at different wage rates.
A natural monopoly can purposely increase its cost of production by
Using its own unregulated subsidiary to inflate its cost.
In Figure 30.2, unemployed labor at the equilibrium wage is equal to
Zero workers.
Republicans argue that labor demand is _______, so ________ jobs will be lost when the minimum wage is raised
elastic; many
Barriers to entry are obstacles, such as patents, that make it difficult for new consumers to enter a market.
false
In how many markets do fewer than four firms produce at least 80 percent of total output?
12
The number of people employed in the competitive market depicted in Figure 30.2 at a wage of $20.00 per hour is
160.
Suppose there are only three firms in a market. The largest firm has sales of $500 million, the second-largest has sales of $300 million, and the smallest has sales of $200 million. The market share of the largest firm is
50 percent.
The long-run average total cost curve of a natural monopolist
Falls continuously as more output is produced.
Public housing is an example of
In-kind income
Which of the following is not consistent with a minimum wage that is set above the equilibrium wage?
There will be no unemployment.
If wages are relatively high, the individual labor supply curve may
Bend backward.
In Figure 30.1, the labor supply could shift from S1 to S2 due to all of the following except
Fewer workers preferring to work in this labor market.
A mathematical summary of inequality based on the Lorenz curve is known as the
Gini coefficient.
Government failure occurs when
Government intervention fails to improve economic outcomes.
The size distribution of income in Figure 33.1 reveals that
Incomes are more equally distributed in Alpha than in Omega.
If the entire output of a market is produced by a single seller, the firm
Is a monopoly.
The long-run average total cost curve of a natural monopolist
Is downward-sloping in the relevant range of production.
A natural monopoly is a desirable market structure because
It allows the producer to deliver products to the market at the lowest possible cost.
A firm's demand for labor is referred to as a derived demand because
It is derived from the demand for the product that the labor is producing
The willingness to work a certain amount of time at a given wage rate is known as
Labor supply.
If payroll taxes are increased, there will be a
Leftward shift of the labor supply curve.
Compared with a competitive market with the same cost and market demand circumstances, a monopolist has
Less pressure to reduce costs and less reason to improve quality.
In Figure 33.1, suppose that the Gini coefficient for Omega is 0.55. The Gini coefficient for Alpha must be
Less than 0.55.
If income is distributed equally, the
Lorenz curve is a straight line.
A graphic illustration of the cumulative size distribution of income is known as the
Lorenz curve.
Monopolists are price
Makers, but competitive firms are price takers.
In which of the following market structures are entry barriers the highest?
Monopoly.
Market failure
Occurs whenever an imperfection in the market mechanism prevents optimal outcomes
Which market structure is characterized by a few interdependent firms?
Oligopoly.
The concentration ratio for an oligopoly is
Over 60 percent.
To maximize profits, an unregulated natural monopolist would choose which combination of price and output in Figure 27.1?
P2, Q2.
It is easiest for new firms to enter a
Perfectly competitive market.
If a natural monopoly was forced to break up into several small competitive firms, the
Price charged by the competitive firms should increase because they no longer have economies of scale.
Profit regulation occurs when regulation requires the natural monopolist to set
Price equal to average total cost.
The pricing strategy in which there is an explicit agreement among producers regarding price is called
Price-fixing
The kinked demand curve explains the observation that in oligopoly markets
Prices may not change even in the face of cost increases.
Oligopolists have a mutual interest in coordinating production decisions in order to maximize joint
Profits.
The U.S. federal income tax is classified as a
Progressive tax only.
If the percentage of income paid in taxes increases as income rises, then the tax system is
Progressive.
Which of the following is used as an antitrust tool that focuses on the structure of industry?
Prohibiting mergers and acquisitions.
The concentration ratio measures the
Proportion of total output produced by the four largest producers in a specific market.
Economies of scale refer to the
Reduction in minimum average costs due to an increase in plant size.
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 Herfindahl-Hirshman Index is the sum of the
Squared market shares of the firms in the market.
The Microsoft Corporation was sued by the government for all but which one of the following antitrust violations?
Stealing competitors' secrets.
The wage rate is
The payment for labor.
When firms are interdependent,
The profit of one firm depends on how its rivals respond to its strategic decisions.
Game theory is
The study of how decisions are made when interdependence exists between firms.
Which of the following would not shift the market demand for labor, ceteris paribus?
The wage paid to labor.
The shaded area in Figure 24.1 represents
Total profit.
Suppose there are three firms in a market. The largest firm has sales of $50 million, and each of the other two firms has sales of $25 million. The Herfindahl-Hirschman Index of this industry is
3,750.
In Figure 24.2, the profit-maximizing level of output is
4 units.
For a minimum wage to have any impact on a labor market, it must be set at a level
Higher than the equilibrium wage.
In the real world, the choice is between
Imperfect markets and imperfect government intervention.
Medicare is an example of
In-kind income.
Wealth refers to
The market value of assets people own.
Democrats argue that labor demand is _______, so ________ jobs will be lost when the minimum wage is raised.
inelastic; few
In Figure 30.2, the equilibrium wage rate is
$16 per hour.
In the long run, an oligopolist is most likely to
Experience economic profits because of barriers to entry.
The profit-maximizing rate of output in Figure 24.1 is
F.
An unregulated natural monopoly can lead to
Higher prices for consumers.
A natural monopoly occurs because of
The existence of economies of scale.