Econ Test 3

Front 1

Monopoly

Back 1

Exists if there is only one supplier of a good in a market and there are no substitutes for that good.

Front 2

Oligopoly

Back 2

Exists when a small number of producers control much of the industry's output. Each is aware of each other's pricing and output policies which leads to a 'conscious interdependence' regarding behavior.

Front 3

Merger

Back 3

The absorption of one firm by another is a means of entering an industry or eliminating a potential competitor.

Front 4

Concentration Ratios

Back 4

Can be calculated as the percentage of total industry output accounted for by the largest four or eight firms.

Front 5

Herfindahl-Hirshman Index

Back 5

A means of estimating industry concentration by emphasizing firms with the largest market shares.
HHI= (sales) market share squared.

Front 6

Conglomerates

Back 6

Merging with firms in other industries.

Front 7

Product Differentiation

Back 7

An attempt by a firm to make the consumer take special notice of the value of their product (may be real or illusory).

Front 8

Cartel

Back 8

An organization of firms that jointly make decisions regarding price and output for the group.

Front 9

Sherman Act 1890

Back 9

Vaguely dealt with restraint of trade and commerce as it related to antitrust

Front 10

FTC Act 1914

Back 10

Federal Trade Commission.
Established the FTC to serve as the consumer's watchdog. It is primarily concerned with false advertising and deceptive business practices.

Front 11

Robinson-Patman Act 1936

Back 11

Established to limit price discrimination in the form of special promotional discounts. Discounts were permitted only where justified by differences in cost or when introduced as good faith efforts to meet competition.

Front 12

Celler-Kefauver Act 1950

Back 12

Made it illegal to acquire either the stock or assets of a competitor.

Front 13

Hart-Scott-Rodino Act 1976

Back 13

Permits the Justice Department to require:

a. Premerger notification by firms 30-50 day waiting period.
b. Firms and individuals must furnish information relevant to the merger investigation.

Front 14

In-Kind Transfers

Back 14

Any good or service provided by government to a select group of citizens such as food stamps, housing or educational assistance.

Front 15

Poverty Income Threshold

Back 15

An index estimating the costs of securing the minimal requirements for food, shelter, fuel, clothing and transportation.

Front 16

Lorenz Curve

Back 16

A curve that shows the cumulative percentage distribution of income or wealth in a society.

Front 17

Median Family Income

Back 17

The midpoint of the family income distribution, above and below which an equal number of families fall.

Front 18

Mean Family Income

Back 18

The average family income level.

Front 19

Four requirements for establishment of a purely competitive market. (list)

Back 19

1.) Large numbers of potential buyers and sellers. 2.) Firms produce a similar product. 3.) Each buyer and seller is so small that they cannot influence pricing or output. 4.) There are no significant barriers to entry or exit from an industry.

Front 20

Two methods to determine proper production levels. (list and define)

Back 20

TR-TC. A firm will produce at level where there is the greatest difference between TR-TC.
MC=MR. A firm will produce to the point that MC (cost association and with producing the last unit) equals MRC the revenue brought to by sale of last unit.)

Front 21

Three conditions that facilitate monopoly price discrimination. (list)

Back 21

1. A firm must have monopoly power and be a 'price maker'. 2. Customers must be separable into sub-markets with different demand elasticities. 3. Arbitrage must be prevented.

Front 22

Three areas that consumers protection laws concentrate. (list)

Back 22

1. Harmful goods. 2. Unfair competition and advertising. 3. Product safety.

Front 23

Three causal factors for the difference in wage rates. (list and define)

Back 23

1. Difference in nonmonetary benefits. Some jobs provide nonmonetary benefits. 2. Differences among markets. Labor and supply demand. Consumers value products differently. Unions may hold wages higher. Employment monopoly may occur. 3. Differences among workers. Some people are more productive than others.

Front 24

Pros and cons of minimum wage law. (list)

Back 24

Pros- anyone who works for a living deserves a minimum level of (acceptable) wage.
Cons- minimum wages actually cost certain groups of people their jobs since employers can't cut costs. Instead, costs are reduced by reducing employment (nonwhites and young).

Front 25

Four causes for poverty. (list)

Back 25

1. Low Productivity. 2. Sexual and Racial Discrimination. 3. Low National Demand. 4. Choice of Lifestyle.

Front 26

Five methods used by government to relieve poverty. (list)

Back 26

1. In-Kind Transfers. 2. Cash Transfers. 3. Negative Income Tax. 4. Minimum Wage. 5. Job Training.