Microeconomics Midterm 3 Review

The number of firms in a monopolistically competitive market means that

Each firm has a relatively small share of the total market since there are many firms in the industry

The egalitarian principle refers to

"To each exactly the same"

Which of the following is NOT considered a determinant of income differences?

Equity of fairness

The primary purpose of a strike by labor unions is to

Extract from the firm better and improved conditions of work or contract terms

A practice which might force employers to use more labor than they would otherwise is referred to as

Featherbedding

A union requirement that a fireman has to be hired to work in a diesel locomotive would be an example of

Featherbedding

Any practice that forces employers to use more labor than they would otherwise use is

Featherbedding

In the long run, if some monopolistically competitive firms are earning economic losses then

Firms will leave the industry

A state with "right-to-work" laws would most likely have

Higher employment levels than neighboring states without such laws

Many argue the poor are getting poorer, at least in a relative sense. Evidence that contradicts this is that

Household spending of the lowest twenty percent of households relative to the highest twenty percent of households has held constant over the last thirty years

One productivity standard for income distribution stated in the text is

Income distribution should be based on contribution to society's total output

Entry into a monopolistic competitive industry

Is easy

The distinguishing of products by brand name, color, and other attributes

Is known as product differentiation

If a firm is an oligopolist, which is NOT true?

It can sell all the units it wants at the going market price.

An implication of the downward slope of the demand curve for a monopolistic competitive firm is that

It's marginal revenue curve slopes downward but lies below the demand curve

When MFC > MRP, a firm in a competitive market will

Layoff workers

The demand curve for a monopolistically competitive firm is

Less elastic than the demand curve of the perfectly competitive firm

The more bowed out the Lorenz curve, the

Less equal the income distribution

If an individual receives in-kind transfers from the government in the form of food stamps, public housing, and so on, his money income is

Less than his total income

All of the following can create an oligopolistic structure EXCEPT

Low barriers to entry

A monopolistic competitor will maximize its profits at the output level at which

MC = MR.

An increase in labor productivity will shift

MRP curve to the right

Which of the following statements is TRUE about the market and individual firm's supply curve for labor?

The market supply curve is more inelastic than the firm's supply curve

The more bowed (skewed) the Lorenz curve

The more unequal the distribution of money income

A concentration ratio gives

The percentage of all sales contributed by the four or eight largest firms in the industry

When poverty is defined by an relative real income level, what will happen to the poverty rate if the distribution of income is not perfectly equal?

The poverty rate will change, but always exist

An example of a zero-sum game is

Poker

Within a game theory model, if a change in decision-making raises corporation A's profits by $50 and lowers corporation B's profits by $40, the game is a

Positive-sum game

The impact of a strike is limited to the ability of the union to

Prevent replacement workers from continuing their work

For a monopolistically competitive firm

Price is greater than marginal revenue at all levels of output except for the first unit.

Which of the distributive standards does NOT involve a value judgment?

1) Productivity standard 2) Egalitarian standard 3) Merit standard

If industry sales are $2,000, and the top four firms have sales of $170, $140, $100, and $80, respectively, what will be the four-firm concentration ratio?

24.5%

An association of producers in an industry that agree to set common prices and output quotas to prevent competition is

A cartel

A plumbers' union is an example of

A craft union

The leadership of unions must recognize that they face

A fundamental trade-off between higher wages for members and fewer jobs for members

Compared with a perfectly competitive firm facing the same costs, long-run equilibrium for a monopolistically competitive firm will result in

A higher price and less output

The joining of firms that are producing or selling a similar product is known as

A horizontal merger

In a cartel, firms jointly act as

A monopoly firm

People's willingness to buy the PC or Mac format of computer software depends on how popular the software format is among other consumers. This is an example of

A network effect

When a consumer's willingness to buy a good or service is influenced by the number of people who have purchased that good or service, this is called

A network effect

The mutual interdependence of oligopolists ensures that each oligopolist has

A reaction function

The long-run equilibrium of a monopolistically competitive firm is characterized by

A tangency of the average total cost curve with the firm's demand curve

Featherbedding is the term for

Any practice that forces employers to use more labor than they would otherwise

A group of producers that agree to coordinate their production is called a

Cartel

When OPEC meets to set production levels, this organization is playing a

Cooperative game

When oligopolistic companies engage in collusion, the companies are involved in a

Cooperative game

After participating members of a cartel form an agreement on common prices and output quotas, then an individual firm can increase its own profits by

Decreasing prices

If we include cash benefits and in-kind benefits available to low-income people, the share of the U.S. population in poverty

Drops dramatically

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

More elastic

Sunil has decided not to purchase another can of Stosh because his friends laughed at him the last time he purchased some. Stosh is no longer a popular item. Sunil's action is known as

Negative market feedback

A monopolistic competitor would face a demand curve with a

Negative slope

A game in which the players neither negotiate nor coordinate in any way is a

Non-Cooperative game

In a long-run monopolistically competitive equilibrium

P = ATC, and ATC is not at its minimum value

The long-run equilibrium of a monopolistically competitive firm is characterized by (Equation)

P = ATC, and ATC is not at its minimum value.

The key feature of monopolistic competition is

Product differentiation

An outward shift in the consumer demand for wheat will

Raise the price of wheat and shift out the marginal revenue product of labor producing wheat

In general, the demand for the product of a monopolistic competitor is

Relatively elastic

Which of the following is NOT subject to a network effect?

Rotating your tires every six months

All of the following lead to a difference in income EXCEPT

Sales tax

Official poverty rates in the last 40 years have

Stayed roughly the same

The major similarity between monopolistic competition and perfect competition is

That both assume many buyers and sellers

A geometric representation of the distribution of income is referred to as

The Lorenz curve

Which of the following is NOT a true statement about the Lorenz curve?

The Lorenz curve includes both money income and income in kind

The other name for the National Labor Relations Act of 1935 is

The Wagner Act

Under monopsony, the marginal factor cost of a worker is equal to

The additional worker's wage rate plus the increase in the wages of all other existing workers

The demand for labor is considered a derived demand since it depends on

The consumer demand for the output produced

Suppose the market for autoworkers is initially in equilibrium, but then suppose the automakers improve working conditions at the plants. What happens in the market for autoworkers?

The equilibrium wage rate will decrease and the equilibrium quantity of labor will increase

When there is an increase in the wages the banking industry offers accountants, what happens to the supply of accountants available to other industries?

The supply to other industries falls

Because there are low barriers to entry in a monopolistically competitive market

There are many firms in the industry

An oligopoly is a market situation in which

There are very few sellers and they recognize their strategic dependence on one another

All of the following are income in kind EXCEPT

Tips received by a waitress

All of the following are social insurance programs designed to attack poverty EXCEPT

Tuition assistance

If you want to become an actor, and you must join the Screen Actors Guild after your first job, the Screen Actors Guild is a(n)

Union Shop

Which of the following will not cause the supply of labor curve to shift in the economics professor industry?

Universities have discovered a way to make professors more productive

For a monopsonist, marginal factor cost exceeds the wage rate since

When new workers are hired the wage rate must be increased for all workers and not just for the additional workers