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47 Cards in this Set

  • Front
  • Back

A concentration ratio measures the

Proportion of industry output produced by the largest firms.

Identify the Nash equilibrium outcome for this game. What outcome and strategies will the firms choose in equilibrium?Firm A will and Firm B will

Price low


Price low

arises when firms act together and form an organization in order to reduce output and keep prices high.

Cartel

In a monopolistic competitive industry, firms can try to differentiate their products by

enhancing product’s physical aspects and all of the above

Which of the following would most likely create the setting for an oligopoly?

government grants Alex, Trent, and Alyse each a patent for their respective molybdenum based electric car batteries

Shopping malls typically lease retail space to a large number of clothing stores. When this group of retailers competes to sell similar but not identical products, they engage in what economists call [a] .

Monopolistic competition

Which of the following may not characterize an oligopoly?

Substantial market power

occurs when market forces and other circumstances have allowed several large firms to have all or most of the sales in an industry.

Oligoply

Market share can be computed by dividing

The amount sold by a single firm by the total sold in the market.

An industry's market structure refers to

The number and size of the firms in the industry.

There is a skating rink in your city that is open to anybody to use at any time. They even provide skates for people who don't own any. This is an example of a good that is

rivalrous and nonexcludable

An individual who wants others to pay for public goods, but plans to use those goods for their own purposes, is often referred to as a

Free rider

Which of the following would most likely be recognized as a defining characteristic of a public good?

the good is both a and b above

Government has a variety of policies that allow inventors to _____________ , such as the granting patents and ______________________ .

receive an increased rate of return


subsidization of research and development

If large numbers of individuals choose to behave as free riders,

the public good may never be provided

In order for a good to be classified as ____________ , when one person uses the good, others are also able to use it.

Nonrivalrous

Cathy can take either of two separate roads to drive to work. The first is a lightly used new toll road that is rarely congested. The second road is a local road with no tolls, but it is often congested and has many potholes. In this instance, the toll road is

rivalrous and nonexcludable

For a positive externality, than the social benefits.

private benefits of an action are less

For a negative externality, the _______________________ than the costs imposed on society as a whole.

Private benefits of an action are less

Which of the following would be classified as a positive externality?

converting a derelict empty lot to a public vegetable garden

Generally, market competition and technology can

Sometimes a or b

I'mAComputerCo. would likely be more willing to undertake an innovative research project to reduce the amount of electricity required to run its computers if there were some form of guarantee that if it succeeded,

It could sell the new computer as a monopoly for at least a few years

When it is costly or impossible to exclude someone who hasn't paid to use a particular good from using it, then that good is classified as being

Nonexcludable

The equilibrium price and quantity when social costs are taken into account are

Price = $35, Quantity = 30

include both the private costs incurred by firms and also costs incurred by third parties outside the production process.

Social costs

If a steel manufacturer considers the costs of labor and materials, as well as the broader costs of environmental injuries resulting from its manufacturing processes,

it is factoring in the social costs of the pollution it generates.

Some economists argue that if privately owned firms were required to pay the social costs of their pollution, the result would be:

the price of goods will rise and a and b above

If no externalities of pollution exist in a particular industry, the interaction of demand and supply___________________________ .

will coordinate social costs and benefits

Traditionally, policies for environmental protection in the U.S. have focused on__________________ pollutant could be emitted.

setting limits for how much of each

Market failure describes a situation in which the market itself ________________________ in a way that balances social costs and benefits.


fails to allocate resources efficiently

describes a situation where a third party, outside the transaction, suffers from a market transaction by others.

Negative externality

Why do U.S. economists commonly refer to externalities as an example of market failure?

externalities present a case where markets only consider some social costs

A beekeeper decides to locate her business on a plot of land that is between an apple orchard and an elementary school. A negative externality that can result is

the possibility of the bees stinging the students at the school.

A beekeeper decides to locate her business on a plot of land that is between an apple orchard and an elementary school. A negative externality that can result is

the bees helping to pollinate the orchard, leading to more fruit.

A positive externality arises in a situation where a third party, outside the transaction,

benefits from a market transaction by others.

Command-and-control regulation is a body of law that

can include both b and c

The equilibrium price and quantity when only private costs are taken into account are

Price 30, quantity 80

Rather than arguing over whether the ultimate goal is zero pollution or a reasonable level of pollution, the immediate focus should be to tackle the environmental issues where the ___________________ and the _______________.

marginal benefits are greatest


marginal costs are least

Using the term "spillover" is a less formal means of describing

an externality

Which of the following is a safety net that could provide a decent standard of living and/or incentives to work?

Supplemental Security Income and the above

In circumstances dealing with poverty, the term means taking income from those with higher incomes and providing income to those with lower incomes.

Redistribution

Why did inequality of household income increase in the United States in recent decades?

demand for high-skilled labor at higher wages increased and b and c

Poverty is measured by the number of people who fall below

All above

If a society decides to reduce the level of economic inequality, which of the following sets of tools can it use?

the three mains sets of tools it can use include all of the above


When reference is made to the , it means the specific amount of income needed for a basic standard of living.

Poverty line

With respect to market forces and/or labor markets that determine peoples' wages, which of the following is a true statement?

labor markets create considerable inequalities relating to income

With respect to market forces and/or labor markets that determine peoples' wages, which of the following is a true statement?

labor markets create considerable inequalities relating to income