question
Which of the following statements is not correct?
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Antitrust laws can reduce social welfare if they prevent mergers that would lower costs through more efficient joint production.
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One problem with regulating a monopolist on the basis of cost is that
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it does not provide an incentive for the monopolist to reduce its cost.
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The reason to regulate utilities instead of using antitrust laws to promote competition is that a utility is usually a
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Natural Monopoly
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In both perfect competition and monopolistic competition, each firm
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has many competitors.
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In which of the following markets is economic profit driven to zero in the long run?
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monopolistic competition
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A firm produces the welfare-maximizing level of output
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only when the market is perfectly competitive.
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A firm can earn economic profits in the long run
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only when the market is a monopoly.
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A firm charges a price that exceeds marginal cost
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when the market is a monopoly or monopolistically competitive.
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We must be knowledgeable of how people behave in strategic situations if we are to understand
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oligopolistic markets.
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As a group, oligopolists would always be better off if they would act collectively
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as a single monopolist
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Because each oligopolist cares about its own profit rather than the collective profit of all the oligopolists together,
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they are unable to maintain the same degree of monopoly power enjoyed by a monopolist.
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Games that are played more than once generally
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make collusive arrangements easier to enforce.
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We know that people tend to overuse common resources. This problem can be viewed as an example of
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the prisoners' dilemma.
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From society's standpoint, cooperation among oligopolists is
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undesirable, because it leads to output levels that are too low and prices that are too high.
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A firm that practices resale price maintenance
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has no incentive to reduce competition between its retailers. Resale price maintenance can lead to more service.
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The term "compensating differential" refers to
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a wage difference that arises from non monetary characteristics of different jobs.
question
Suppose that a company hires recent college graduates for two types of jobs, sales people and credit analysts. The hours worked and skill levels are the same for both positions. The sales people get to travel to several desirable locations, whereas the credit analysts do not leave the home office. When comparing the salaries of the two positions, it is likely that the company pays the
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sales people less as a compensating differential.
question
Jake and Harry each have 130 hours of college credit from Impressive University. Each has 30 hours of economics. Jake has a bachelor's degree, while Harry is 3 credits short of required physical education classes and therefore does not have a degree. Each of them has one year of experience as a market analyst for ABC Company. Assuming that the physical education class would not enhance Harry's job performance, if Jake earns a higher salary than Harry, the ABC Company may subscribe to the
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signaling theory.
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The primary economic explanation as to why a world-renowned architect cannot attain the "superstar" status that an athlete or actor can attain is that
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it is impossible, currently, for an architect to supply his or her services at low cost to every customer.
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A union's major source of power is its
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ability to threaten a strike.
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Which of the following statements does not accurately describe the market for labor?
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Firms are willing to pay more for better-educated workers as long as there is an excess supply of this type of worker.
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Why would a wage differential due to discrimination be unlikely to persist in a competitive labor market?
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There is a cost advantage for firms that do not discriminate.
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Economists argue competitive markets provide a "natural remedy" to discriminatory wage practices. Which of the following is widely recognized as a potential limit to the effectiveness of that natural remedy?
answer
Some customers are discriminatory in their buying habits.
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