what are the two basic types of government regulation
social regulation
economic regulation
a firm that has taken advantage of economies of scale and expanded to become the only producer in the market is
a natural monopoly
without any regulation the natural monopolist will
produce less output than it would if the industry was purely competitive
when consumers have less information about a product than do seller then this is the situation of
asymmetric information
the main rationale for government regulatory functions is
to protect consumer interests
the notion that regulated industry members themselves, sooner or later, are able to control regulatory bodies is referred to as
the capture theory
government policy that attempts to prevent collusion among the sellers of a product and attempts to prevent restraint of trade is known as
antitrust policy
when trying to determine if a firm has monopoly power courts in the united states tend to examine
the firms percentage share of the "relevant market
the sudsy soda company will not sell its soft drinks to a restaurant unless that business also buys paper cups from sudsy. this requirement is an example of
tie in sales
the idea behind antitrust legislation is to
promote competition in the market
the additional revenue earned from hiring one more worker is known as the
marginal revenue product of labor
the additional cost associated with the hiring of one more unit of labor is known as the
marginal factor cost of labor
the more inelastic the consumer demand for the final product the
more inelastic the demand for labor producing the product
as the wage rate rises other things constant perfectly competitive firms will employ
fewer workers
when manufacturing a car parts must be soldered together. this work can be done by labor or by a robot (capital). more robots will be hired when the price of labor increases. this is known as
the substitution effect
a fall in the price of the final product produced by a firm will cause
a reduction in demand for an input used to produce the final product
a firms employment of labor outside the country in which the firm is located is called
outsourcing
suppose that the U.S. firms outsource plane manufacturing jobs to China, it is expected that
the wage rate for workers manufacturing planes will decrease in the U.S. but increase in China
in a perfectly competitive labor market the labor supply curve facing the firm will be
horizontal
a firm wanting to mazimize profits should operate in such a way that
MRP equal MFC in the input market but MC must exceed MR in the output market
industrial unions
labor unions that consist of workers from a particular industry
such as automobile manufacturing
labor unions
worker organizations that seek to secure economic improvements for their members
right to work laws
law that make it illegal to require union membership as a condition of continuing employment in a particular firm
craft unions
labor union composed of workers who engage in a particular trade or skill
collective bargaining
negotiation between the management of a company or of a group of companies and the management of a union or group of unions for the purpose of reaching a mutually agreeable contract that sets wages, fringe benefits, and working conditions for all employee
closed shops
a business enterprise in which employees must belong to the union before they can be hired and must remain in the union after they are hired
union shop
non union members join later
jurisdictional disputes
disputes involving 2 or more unions over which should have control of a particular jurisdiction
sympathy strikes
a strike by a union in sympathy with another unions strike or cause
secondary boycotts
a boycott of companies or products sold by companies that are dealing with a compnay being struck
why would there be a fall in union membership
deregulation
immigration
shift from manufacturing to services
the demand for ion labor can be increased by
increasing worker productivity
increasing the demand for union made goods
decreasing the demand for non union made goods
featherbedding
any practice that forces employers to use more labor than they would otherwise or to use existing labor in an inefficient manner
monopsonist
the only buyer in the market (usually labor)
monopsonistic exploitation
paying a price for the variable input that is less than the marginal revenue product
the lorenz curve
a geometric representation of the distribution of income
-straight curve represents complete income equality
-the more bowed the curve the more unequal income is distributed
4 determinants of income differences
age
marginal productivity
inheritance
discrimination
age earnings cycle
the regular earnings profile of an individual throughout his or her lifetime
the productivity standard
to each according to what she or he produces
the egalitarian principle
to each exactly the same
marginal productivity
talent
experience
training
investment in human capital
food stamps
government issued coupons that can be used to purchase food
earned income tax credit program
designed to provide rebates to low income workers
why has healthcare rise so much?
age health care expenditure equation
new technologies
increased demand
number of physicians
distribution of income
the way income is allocated among the population