Return to Set

Upgrade to remove ads

View

  • Term
  • Definition
  • Both Sides

Study

  • All (92)

Shortcut Show

Next

Prev

Flip

ECON 300: EXAM 3

The Sherman Antitrust Act of 1890
SAA's intent of preventing monopolization and/or conspiracy of trade Goal: Preserve & Promote competition
Flip
"Exclusive Dealing"
Is when selling to a retailer on the condition, that the retailer not carry any rival products
Flip
The Clayton Act of 1914
Made price discrimination illegal Made interlocking directorates illegal Made illegal tying & exclusive contracts
Flip
The Robinson-Patman Act of 1936
Passed to decrease the failure rate of small business by protecting them from competiton from large & growing chain stores
Flip
Tying Contracts are...
arrangements whereby the sale of one product is dependent on the purchase of some other product
Flip
The Federal Trade Commission Act of 1914
Declared unfair methods of competition in commerce to be illegal unfair competition illegal
Flip
The Wheeler-Lea Act of 1938
Empowered the Federal Trade Commission to deal with false & deceptive acts or practices e.g. false and deceptive advertising
Flip
The Cellar-Kefauver Anti-merger Act of 1950
Designed to prevent one company from acquiring another's physical assets if the acquisition reduces competition
Flip
Herfindahl Index
Calculated by adding the squares of the market share of each industry Measures degree of concentration <1,000 represents competitive industry >1,800 represents concentrated industry 10,000 is perfect monopoly MAX value
Flip
Natural Monopolies exists when...
one firm can supply the entire output demanded at lower cost than two or more firms can
Flip
Regulating Natural Monopolies & Criticism
Regulating Nat. Monopolies are done by the govt by determining acceptable profit & output set price equal to average total costs Criticism No incentive for firms to hold costs-down
Flip
Natural Monopolies imposed to using Marginal-Cost Pricing....
results in firm taking aloss
Flip
Regulatory Lag is...
the period of time between when nat. monopolies costs change & the time regulators adjust monopoly price
Flip
The Capture Theory of Regulation specifies that...
industries or firms can sometimes gain control of the agencies that are attempting to regulate them
Flip
Firms that are price takers face what kind of supply curve?
A horizontal supply curve
Flip
Derived Demand
The demand for factors idea that change in demand for a good will affect the demand for the factors used to produce that good
Flip
Marginal Revenue Product (MRP) is...
The additional revenue generated by employing an additional factor unit equal to marginal revenue multiplied by marginal physical product MRP= MR x MPP
Flip
Marginal Factor Costs (MFC) is...
The additional costs generated by employing an additional factor unit
Flip
The factor supply curve of a price taker is _____, whereas the market factor supply curve is ___________.
The factor supply curve of a price taker is HORIZONTAL the market factor supply curve is UPWARD SLOPING
Flip
The Marginal Factor Cost curve for a factor price taker is?
The MFC curve for a factor price taker is HORIZONTAL
Flip
The Marginal Factor Cost curve for a factor price taker is?
The MFC curve for a factor price taker is HORIZONTAL
Flip
What is a firm's FACTOR DEMAND CURVE also known as?
It is also known as its MARGINAL REVENUE PRODUCT CURVE
Flip
Why does a perfectly competitive firm's Marginal Revenue Product (MRP) curve slope DOWNWARD?
because MRP=MRxMPP as more of a factor is employed, the lower its MPP is thus MRP DECLINES
Flip
At what point will a firm maximize profits by hiring factors up to this point?
At the point MRP=MFC As long as MRP > MFC
Flip
A firm's factor demand curve is the...
MRP or VMP if the firm is a price taker (perfectly competitive) MRP curve if the firm is a price searcher
Flip
What is Value Marginal Product (VMP)?
The price of the product multiplied by the additional output resulting from an additional factor unit employed VMP= P x MPP
Flip
What is the result of a decrease in Marginal Physical Product (MPP)?
It will cause the firm's factor DEMAND curve to shift LEFT
Flip
For a product price searcher...
P>MR therefore, VMP>MRP
Flip
What are ways there can be an increase in the demand for labor?
an increase in demand for the product that labor produces an increase in the marginal physical product of labor
Flip
Percentage change in the wage rate has what affect on demand?
The elasticity of demand for labor measures the percentage change in quantity demanded of labor Brought by percentage change in Wage Rate
Flip
Absolute Value of elasticity of demand for labor
...
Flip
The lower the elasticity of demand for a product...
the lower the elasticity of demand for the labor that produces the product
Flip
The more substitues for labor...
the higher the elasticity of demand for labor
Flip
The market supply curve of labor...
slopes upward, indicating that as the wage rate rises, the quantity supplied of labor rises
Flip
The person who chooses to work at a job that pays $40,000 a year instead of at a job that pays $100,000 a year is probably receiving
more non-pecuniary benefits in the $40,000 job than in the $100,000 job
Flip
Suppose there are two labor markets, A and B, and labor is homogeneous between markets. The wage rate in labor market A falls relative to the wage rate in labor market B. What happens in labor market B?
The supply curve of labor shifts rightward
Flip
A decrease in the wage rate
decreases the quantity supplied of labor
Flip
What are reasons why wage rates differ?
In the short run, demand conditions are not the same in all labor markets Some jobs have special non-pecuniary aspects Labor is not homogeneous
Flip
If, at a particular wage rate in a competitive market, the quantity SUPPLIED of labor exceeds the quantity demanded of labor, then
some workers will begin to accept lower wages and, as a result, employers will begin to hire more workers
Flip
What conditions are necessary for wage rates to be identical in every labor market in both the short run and the long run?
Demand for labor is identical in each market non-pecuniary factors in each job are the same All labor is homogeneous All labor has zero costs of mobility
Flip
Non-Pecuniary Benefits is...
the non-money benefits a person may receive in a job
Flip
What can cause an increase in real wages?
A technological advance that increases the quality of the capital goods used by labor Higher demand for labor
Flip
What assumptions are not likely to be met in the real world?
Demand for labor to be identical in every labor market Non-Pecuniary factors in each job are the same All labor is homogeneous All labor has zero costs of mobility
Flip
The Marginal Productivity Theory states that...
firms in perfectly competitive product and factor markets will pay factors their marginal revenue product
Flip
What does the Marginal Productivity theory imply?
The theory implies that a worker will be paid in amount EQUAL to his/her contribution to the productive process
Flip
Marginal Productivity Theory implies that a a worker will be paid a wage such that
W = MRP, and W = VMP
Flip
If MRP = VMP = MFC = wages, then the firm is
selling its product in a perfectly competitive market and is hiring its labor in a perfectly competitive labor market
Flip
For a factor price taker, the marginal factor cost curve...
and the factor supply curve are identical and horizontal
Flip
What is true about total money income in 2005?
The lowest 20% of all income earners earned less than 5% of the total money income
Flip
"In-Kind" transfer payments are made...
in the form of goods or services
Flip
Evidence seems to indicated that the distribution of income prior to adjusting for taxes and in-kind transfer payments is...
less equal than after adjusting for taxes and in-kind transfer payments
Flip
What are reasons for economists to contend that in-kind transfers should be included in the calculation of an individual's income?
Simple money income is not a complete measure of one's command over goods & services in-kind items make a person "better-off" than the person's actual money income would lead us to believe
Flip
An individual's income equals...
labor income + asset income + transfer payments -taxes = Individual Income
Flip
The Lorenz Curve
is a graphical representation of the distribution of income expresses the relationship between cumulative percentage of households & percentage of income
Flip
If there were perfect income equality, the Lorenz curve...
would be a 45-degree line
Flip
The Gini coefficient
is a measurement of the degree of inequality in the income distribution
Flip
If the Gini coefficient is zero? if 1?
complete income equality if zero complete income inequality if 1
Flip
What is one way to reduce the degree of income inequality?
increase transfer payments going to people with low labor and asset incomes and increase taxes on people with high labor and asset incomes
Flip
One measure of the severity of poverty is the ratio of income to poverty which is calculated by...
dividing a family's income by the family's poverty income threshold
Flip
Anytime the Ratio of Income to Poverty for a family is...
Greater than 1, the family is not considered to be living in poverty Between 1.0 and 1.25, the family is considered to be "near poor"
Flip
Poverty Income Threshold for an individual under 65 years old in 2006 was?
$10,488
Flip
Wage discrimination exists when?
individuals of equal marginal revenue products are paid different wage rates
Flip
Reasons for income differences in the text?
Luck Wage discrimination Risk Taking LOW MINIMUM WAGE is NOT a reason
Flip
What does the marginal productivity normative standard of income distribution state?
It states that people should be paid their marginal revenue products
Flip
What is the argument of proponents of the absolute income equality standard?
Argue that individuals should receive a wage EQUAL TO their marginal revenue product, and that this is a just distribution an equal distribution of income will lead to the maximization of societal utility
Flip
The veil of ignorance is...
the veil behind which a person does not know whether he/she will be rich or poor once the veil is removed
Flip
Absolute Poverty
A family is in poverty if it receives less that $10,000 a year in money income
Flip
in 2006, the poverty income threshold for a family of four was...
$20,416
Flip
In 2005, what percent of the total income of all households did the top 20% of households in the US earn collectively?
50%
Flip
How to compute the Gini coefficient?
computed by dividing the area between the line of perfect income equality and the actual Lorenz curve by the total triangular area below the line of perfect income equality
Flip
What does the absolute income equality standard of income distribution state individuals should receive?
individuals should receive an equal percentage of total income
Flip
According to the Rawlsian normative standard of income distribution, people will argue for...
a different income distribution if they know what their position in the current income distribution than if they did not
Flip
Rawls argues that a person who is begin the veil of ignorance...
is more likely to want a more equal distribution of income than if he/she were not behind the veil
Flip
If income groups were divided into 5 groups they would be interpreted as...
the top fifth as rich, middle three-fifths as middle income and the lowest fifth as poor
Flip
What are transfer payments?
Transfer payments are payments that are not made in return for goods and services currently supplied
Flip
What are in-kind transfer payments?
They are transfer payment that are paid in a specific good or service
Flip
A winner-take-all market
is one in which the top producer in the market earns significantly more than other in the same market
Flip
How could the federal government make the income distribution more equal?
Increase taxes on the rich and increase transfer payments to the poor & middle class
Flip
Asset Income
The return on savings that a person receives
Flip
Calculating a person's labor income
multiplying wage rate a person earns by the number of hours the person works
Flip
Suppose the data show that each year between 1965 and 2006, 10% of all income earners earned little enough to be considered poor. What does it follow?
the person who was part of the 10% poor in 1965 may not be part of the 10% in 2006 the income distribution in the US was unequal
Flip
Factors contributing to income inequality
Innate abilities & attributies the amount of work a person chooses to do education & training Luck
Flip
When does wage discrimination exist?
When individuals of EQUAL ABILITY & PRODUCTIVITY are paid different wage rates
Flip
If poverty is defined in relative terms, then it follows that
there are poor people in Beverly Hills, CA there will always be poor people unless there is absolute income equality
Flip
Milton Friedman
Economist who said, "I am distressed by the sight of poverty. I am benefited by its alleviation...."
Flip
A Public Good is...
a good that is consumed by one person can be consumed by other persons to the same degree and the consumption of which cannot be denied to anyone
Flip
In 2006, the median (total money household) income was highest for? and lowest for?
Highest for Asians Lowest for African-Americans
Flip
The Southern Region of the US
Region of the US with the highest poverty rate
Flip
Poverty rate in the US
Mississippi has the highest; New Hampshire has the lowest in 2001, California had most millionaires; Vermont had fewest
Flip
2005 income inequality & Gini coefficient US v. Sweden US v. Mexico
the Gini coefficient was higher in the US than in Sweden higher in Mexico than in US
Flip
The social insurance justification for government welfare assistance holds that...
individuals currently not receiving welfare think they might one day need welfare assistance and thus they support welfare programs today
Flip
HMO vs. PPO
HMO Chose doctors within the network designed to control costs PPO Choose who you see
Flip
( 1 of 92 )
Upgrade to remove ads
Login

Join to view and access 3M+ class-specific study document.

or
We will never post anything without your permission.
Don't have an account?
Sign Up

Join to view and access 3M+ class-specific study document.

or

By creating an account you agree to our Privacy Policy and Terms Of Use

Already a member?