Micro - Exam II

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Antitrust enforcement focuses on industry market structure and company _____.

behavior

One Front Page Economics article titled "Recycling Wastes Money" suggests that the government has decided to intervene by

bypassing the market.

Which of the following is the prime cause of the greenhouse effect?

carbon dioxide

All of the following are examples of natural monopolies except

college bookstores.

The Clean Air Acts of 1970 and 1990 reduced pollution through

command-and-control regulatory standards.

Which of the following is an example of bypassing the market through regulation to achieve environmental protection?

command-and-control standards

Market failure occurs in natural monopolies because

consumers get inaccurate information about the opportunity cost of the product.

Market power is the ability of a firm to

control the price and quantity supplied.

The goal of antitrust laws is to

control the structure of an industry or prevent the abuse of market power.

Shares of ownership in a corporation are known as

corporate stock.

According to EPA studies, the United States generates over ____ billion tons of solid waste each year

5

Only ____ percent of the U.S. population is served by a system of sewers and adequate water treatment plants

70

What percentage of the 20,000 collective bargaining agreements negotiated each year are concluded without recourse to a strike?

90 percent

When the government forces a natural monopoly to produce output at a level at which its price equals its marginal cost, then the firm's profits will _____ because the marginal cost is always _____ the average total cost.

decrease; below

A five-cent container deposit on bottles

decreases the price of recycled materials and thus encourages recycling.

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

Agriculture

Which of the following industries was substantially deregulated over the last several decades?

Airlines

Marginal physical product diminishes as additional workers are hired because

each worker has an increasingly smaller amount of other factors with which to work.

Which of the following is a market incentive to discourage pollution?

Emission charges and user charges

A five-cent container deposit on bottles

Increases the incentive to recycle.

Microsoft's argument against the government's antitrust suit included all but which one of the following?

It was a natural monopolist.

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

The Sherman Act

Output regulation is likely to result in

a decline in the quality of the product.

Which of the following would not shift the market demand for labor, ceteris paribus?

a decrease in the minimum wage

An emission charge is

a fee imposed on polluters based on the quantity of pollution they generate.

All of the following can be costs of environmental cleanup except

a higher number of homeless pets.

An example of a negative externality in consumption is

a kid throwing a used soda can in the trash versus recycling.

An example of a negative externality in consumption is

a passenger on a train littering.

Which of the following is a common barrier to entry in a monopoly market?

a patent on a new product

An example of a negative externality in production is

a power plant's release of thermal pollution into a nearby river.

Which of the following industries is not an example of monopolistic competition?

airlines

The major aim of government regulation is to

alter industry behavior.

When the FCC hires a new lawyer to help enforce government regulation, her salary is an example of

an administrative cost of regulation.

The Braden brothers considered starting a new skydiving company. Once they read the government regulations they would have to comply with, they changed their minds. This is an example of

an efficiency cost of regulation.

Which of the following can the government use to alter both firm behavior and industry structure?

antitrust laws

The _____ decision is one in which the firm chooses a production process that minimizes its costs for a given output level.

efficiency

Which of the following is a form of government intervention where market power prevails?

enforcement of antitrust laws

In a contestable market,

entry occurs when prices rise above average total costs.

When a firm uses marginal cost pricing, it charges a price that is _____ the marginal cost of production.

equal to

Antitrust enforcement focuses on market structure, while government regulation deals with all of the following except

equilibrium supply.

By altering market incentives, the government tries to shift

external costs to the producer.

The long-run average total cost curve of a natural monopolist

falls continuously as more output is produced.

Product differentiation refers to

features that make one product appear different from competing products in the same market.

All of the following can be costs of environmental cleanup except

fewer hospital visits.

Which of the following is not characteristic of monopolistic competition?

firms with zero control over price

In an effort to maximize profits, oligopolists could participate in all of the following except

game theory.

Government intervention that fails to improve economic outcomes is known as

government failure.

Price-discriminating firms charge higher prices to those who

have lower price elasticities of demand.

Compared with the profit-maximizing choice of a natural monopolist, output regulation will result in a

higher level of output and a lower price.

An unregulated natural monopoly can lead to

higher prices for consumers.

Opportunity wage refers to the

highest wage an individual would earn in his or her best alternative job.

If leisure activities become more attractive, there will be a

leftward shift of the labor supply curve.

When management shuts down a plant and does not allow workers to perform their jobs, there is a

lockout.

Which of the following would definitely not be used by any unregulated monopolist?

marginal cost pricing

If a firm that pollutes wants to maximize its profits, it will produce where

marginal revenue and private marginal cost are equal.

To maximize profit, a natural monopolist produces the level of output at which

marginal revenue equals marginal cost.

Regulation is appropriate if

market failure exists and the benefits of regulation exceed the costs.

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

market power.

When external costs exist,

market prices do not convey the full costs of production.

An industry in which one firm can achieve economies of scale over the entire range of market supply is a

natural monopoly.

Regulation seeks to change market outcomes directly by imposing specific limitations on price, _____, or investment decisions.

output

Antitrust enforcement focuses on market structure, while government regulation deals with all of the following except

perfect competition.

Price leadership

permits oligopolistic firms in a given market to coordinate marketwide price changes.

Which of the following does not function as a barrier to entry into an oligopoly market?

predatory pricing

Temporary price reductions intended to alter market shares or drive out competition are referred to as

predatory pricing.

What is meant by price efficiency?

price is equal to marginal cost

Laws requiring the sorting and recycling of trash are an example of

process regulation.

A monopoly realizes larger profits than a comparable competitive market by

reducing production and pushing prices up

Market failure can result from all of the following except

restrictions on mergers.

The marginal cost of reducing pollution

rises as the environment gets cleaner

What development turned the cable TV market into a contestable one?

satellite and broadband technology

If the marginal cost curves of the private industry and social realm are the same, then we can conclude

the implementation of an emission charge was successful.

A competitive firm should continue to hire workers until the MRP is equal to

the market wage rate.

The wage rate is

the payment for labor.

Social costs are

the total resource costs of an economic activity.

According to the text, which of the following is a form of water pollution?

thermal pollution

Which of the following is not a form of air pollution?

thermal pollution

A nationwide concentration ratio is likely to _____ market power when the market is small and local.

understate

The old industrial unions are being supplanted by

unions of service workers.

Entry into a market characterized by monopolistic competition is generally

very easy because few barriers exist.

Which of the following industries is likely to have the highest concentration ratio?

video game systems

A natural monopoly

will charge high prices if unregulated.

Labor supply can be defined as the

willingness and ability of people to work specific amounts of time at alternative wage rates in a given period of time, ceteris paribus.

Which of the following characterizes monopolistic competition?

zero long-run profit

According to the text, which of the following is a form of water pollution?

Organic pollution

Proponents of electric utility industry deregulation argued that deregulation was justified because

improvements in technology allowed the development of high-voltage transmission power lines

The goal of a company in an oligopoly industry is to

increase market share and profits.

If the demand for hair gel increases, the effect on the hair gel manufacturing job market will

increase the demand for labor and increase equilibrium wages.

An unregulated natural monopoly can lead to all of the following except

increased education levels of workers.

An emission charge

increases private marginal cost and reduces output.

If the government forces a natural monopoly to produce the output level at which P = MC, the firm will

incur losses.

A monopsony

is a market in which there is only one buyer.

For a natural monopoly, marginal cost

is always below average total cost in the relevant range of production.

The long-run average total cost curve of a natural monopolist

is downward-sloping in the relevant range of production.

All of the following are negative externalities in production except

secondhand smoke in a restaurant.

The behavior of profit-maximizing producers is guided by

self-interest.

External costs are the difference between

social costs and private costs.

If a natural monopoly was broken into several smaller competing firms,

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

The marginal factor cost for labor is

the change in total costs that results from a one-unit increase in the quantity of a factor employed.

The text discussion of coal regulations that were enacted in 2011 and 2014 implied that

the costs of pollution abatement must be balanced against the benefits.


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