Exam 3 - Sample 3 Flashcards
A monopoly that exists because of economies of scale is a(n) ______________________
monopoly.
Natural
A government created monopoly such as a power company operates through an
agreement known as a(n):
Public franchise
A payment in excess of opportunity costs is called a(n) ___________________________
Rent
When a business charges different prices to each consumer, it is using
________________ degree price discrimination
First
When a business charges different prices based on quantity, it is using
________________ degree price discrimination.
Second
A consumer buys products in one market and resells them in another. This person is
practicing ______________________________________________
Arbitrage
The percentage of the market controlled by the top 4 businesses in an industry is referred
to as the _________________________________________________
Concentration ratio
(True/False) The prisoner’s dilemma is used to explain why it is in the best interest of
oligopolies to work together rather than engage in price competition.
True, Lesson of the prison dilemma is to collude
Marginal productivity theory says that workers should be paid based on:
Their economic contribution to the firm
A Right to Work law:
Prevents union membership from being a requirement for employment
- Dont have to a union
(True/False) It is illegal in all states to require union membership before a worker is hired, but in most states it is legal to require union membership after a worker is hired.
True
(True/false) Nevada is a Right to Work state.
True
For money to double in value every five years, it must earn _________ percent interest
14
Money earning 2 percent interest will double in value in _________ years
35
Which of the following is false?
a. Incomes are more equal in the U.S. today than at the turn of the century
b. Poverty rates are lower in the U.S. today than at the turn of the century
c. Poverty rates are lower in the U.S. today than in 1980
d. None of the above
C
Which of the following is false?
a. The wealth distribution in the U.S. is more equal than the income distribution
b. Taxes are thought to help make the income distribution more equal
c. The U.S. uses a relative standard for poverty measurement
d. None of the above
a b c
ignore this question
(True/False) The “veil of ignorance” suggests looking at the world as if you were about to
be born, but did not know whether you would be born rich and poor and then imaging
what type of world should exist.
True
I take an action that increases the property value of your house. This is an example of a(n) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ externality.
Positive
Making the creator of the externality pay the true costs of their actions is called:
Internalizing the externality
For Coase’s theorem to work ___________________ costs must be low
Transaction
Coase argues that environmental problems are:
Two sided and can be solved by negotiation between the parties
A person who benefits from something, but gets someone else to pay for it is a(n)
Freerider
Name something outlawed by the Sherman Act
Illegal to be monopoly,
conspire to be a monopoly,
attempt to be a monopoly
I own one of two stores in a small town. The owner of the other store runs off to
Jamaica, leaving me the only store. What law have I violated?
None
Name one group exempt from truth in advertising laws: ___________________________
Politicians
The marginal cost in monopoly always falls _____ the demand curve.
c. twice as fast as
Monopolies that charge one price to everyone capture consumer’s surplus from consumers by:
restricting quantity sold compared with perfect competition
learn graphs
-
If Microsoft is a natural monopoly, then splitting Microsoft into 10 smaller companies
would have what effect in the long term?
we would expect a monopoly firm to emerge over time (1 of the 10 survives)
A single price monopoly would never price at the point of productive efficiency
true
Firms in monopolistic competition get some monopoly power because they use
Product differentiation
In the long run, a firm without strong barriers to entry will only be able to
earn normal profits.
True
Because the actions of each firm in an oligopoly affects the others, the
businesses are said by economists to be:
Interdependent
(True/False) In an oligopoly, there can be no more than 8 to 10 firms
False
olgo - few
In an oligopoly, the innovation (new ideas) almost always come from:
the smaller “fringe” firms
John Nash developed a theory called _______________________________ theory
that explains the behavior of oligopolies.
GAme
In an oligopoly, we expect the firms to compete primarily through:
non-price competition
John Nash’s theory of equilibrium is that equilibrium:
may be bad for all parties
A(n) ___________________________________________________ union is made up
of people with the same skill.
Craft or trade
A(n) ___________________________________________________ union is made up
of people who work in the same industry.
Industrial
Explain how a worker’s pay should be determined, why that rule does not
apply to star singers, and what that means for star singers and record
companies
Marginal productivity. However that doesnt star singer since there is more people that will hire them than
star singers. There is small group bargaining. The singers will have an advantage over the companies. So that
means that star singers are going to get paid too much record companies are going to lose money lose money.
Records make their money from old artist.
Explain the effects of discrimination on the wages of those who are
discriminated against and those who are not, and explain why the market does
not automatically end discrimination.
Draw two graphs. Demand is going to low wages are goign to be low = discriminated. The group that is
discriminated the demand is high
• 3 types - consumer, employer, employee. If those two exist the market wont end it. You have more than one
kind of discriminations market wont end it. If there is one discrimination the market will automatically end it.
Explain how governments deal with the problems created by monopolies
- Regulate. - government set the prices. The problem with regulation is that the company captures the
agencies that are regulating them. The people are regulating are trying to be nice to them so they get hired
from the businesses that are suppose to control. Another way we destroy a monopoly is kill. (Audio). Their is
sherman act, clayton act, interlocking directories, etc.
