Informative Essay on Micro final – Flashcards
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outlawed restraints of trade and monopolization
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Sherman act 1890
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amended by the celler-kefauver act outlaws price discrimination when anticompetitive, tying contracts, anticompetitive mergers, and interlocking directorates.
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Clayton Act
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renewed by the Wheeler-lea act created the federal trade commission and gave it the authority to investigate unfair methods of competition and deceptive acts or practices in commerce.
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Federal Trade Commission Act
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Courts use this to judge monopolies. it was first established in the U.S. Steel case.
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Rule of reason
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Under this rule only monopolies that achieve or maintain their status abusively are in violation of the Sherman Act
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Rule of reason
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Holders of this view see practical politicians "supplying" regulation local regional , and national firms that fear the impact of the competition on their profits or even their long-term survival.
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Legal Cartel Theory of Regulation
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Occurs where economics of scale are so extensive that a single firm can produce the product at minimum average total cost.
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Natural Monopoly
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Government must regulate natural monopolies to prevent abuses arising from monopoly power.
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Public Interest Theory of Regulation
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Have less incentive than competitive firms to reduce costs. They at X-inefficient.
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Regulated Firms
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Suggests that some firms seek government regulation to reduce price competition and ensure stable profits.
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Legal Cartel theory of Regulation
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Initiated by the government in the past several decades has yielded large annual efficiency gains for society.
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Deregulation
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Concerned with the conditions under which goods and services are produced, the impact of production on society, and the physical qualities of the goods themselves.
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Social Regulation
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Carries out most of the social regulation, although states also play a role.
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Federal Government
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-Applying to far more firms -Intruding into day-to-day production process to a greater extent -Expanding rapidly during the same period in which industrial regulation declined
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Social Regulation Differs From Industrial Regulation in Several Ways Including:
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The Clayton Act of 1914 did what?
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-Outlawed price discrimination -Prohibited tying contracts -Prohibited acquisition of stocks of competing corporations -Prohibited formation of interlocking directorates
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Antitrust laws were designed to_________ ____________?
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Promote Competition
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When a group of oligopolists, near-monopolies, or monopolists assign control to a single decision group, this is known as:
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Trust
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A union of two firms that sell similar products in the same Geographic Market is known as
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Horizontal merger
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In general deregulation during the 1970s and 1980s has
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Benefited Society consumers enhanced technology
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Where the wage rate is blank a drop in labor productivity blank the blank and blank blank blank of production
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Fixed increases marginal average total cost
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Breakup an Monopoly into competitive
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Structural remedy
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Prohibit specific anti-competitive practices
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Behavioral remedy
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Practical politician Supply regulation to the local state and National firms that fear impact of competition on profit or long-term
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Legal cartel Theory
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What are the federal regulatory commissions
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Food and Drug Administration equal employment opportunity commission Environmental Protection Agency occupational safety and health administration
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False or deceptive advertising is not employed by businesses is actively monitored by
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Federal Trade Commission
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High market share will behave like bad Monopoly wants to split firms to improve behavior and performance
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Structuralists
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Structure behavior and performance is unclear side with supporting technological advances
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behaviorists
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If economies of scale are extensive than a blank blank will be able to supply an entire Market at a lower cost than could a number of competing firms
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Natural monopoly
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The treatment of mergers as it relates to antitrust law is based upon the combination of existing firms and their effect on blank
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Competition
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Some of the problems addressed by social regulation include
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Job related accidents social discrimination air pollution unsafe products
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When markets are defined more narrowly a firm's market share will appear
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Larger
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What is the Practical purpose of industrial regulation and why
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Set price equal to average total cost so that natural monopolies receives a normal profit
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Wheat soybeans cattle and rice
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Farm commodities
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Sold through restaurants or grocery stores
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Farm products
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Sold in markets characterized by monopolistic competition or oligopoly
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Food products
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Food and income instability in agriculture results from
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Inelastic demand for agricultural products and flatulation and farm output and shifts of the demand curve for farm products
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The concept of blank provides the rationale for government price floor on farm products
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Parity
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The theoretical purpose of industrial regulation is to garner for security the cost reductions a natural monopoly can achieve while avoiding the restrictions of blank and high blank associated with an unregulated Monopoly
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Output prices
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If a natural monopoly is regulated such that it cannot earn more than a normal rate of return then it may try to blank
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Provide opulent working conditions for management and pay higher salaries to its workers
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The US government is more likely to block horizontal mergers than others because horizontal mergers are more likely to
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Increase market share
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Regulators seek to establish rates by setting price equal to
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Average total cost
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When a director of one firm is also a board member of a competing firm
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Interlocking directorate
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Natural monopolies are permitted because they are able to achieve blank that cannot be achieved by a number of competing firms
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Economies of scale
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Starting in 1970s government discovered that some regulated industries were operating blank and if the regulated they could become blank
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Inefficiently competitive
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As a result of deregulation in the 1970s and 1980s
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Real prices have fallen safeties improved new products have been invented
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By determining the costs and benefits economic analysis can lead to more informed and better decisions about the proper amount of blank blank
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Social regulation
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With industrial regulation the lower per unit to cost of production resulting from natural monopolies should benefit blank
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Customers
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When a firm merges with a company that does not produce and puts it needs to make its products or does not sell similar finished goods and services it is called a blank merger
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Conglomerate
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If economies of scale are extensive than a blank blank will be able to supply an entire Market at a lower cost than could a number of competing firms
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Natural monopoly
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Politicians May impose regulations using a legal Monopoly by
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Blocking entry of new firms dividing up the market like a cartel
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The power to investigate unfair competitive practices rests upon the
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Federal Trade Commission
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Traditionally the US government's preferred approach to dealing with natural monopolies has been to
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Regulate prices
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In pure competition and industries Herfindahl index approaches blank and in pure Monopoly and industry's Herfindahl index equals blank
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0, 10000
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According to the proponents of social regulation
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Social regulation is costly but the benefits of social regulation or greater than the costs
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The treatment of mergers as it relates to antitrust law is based upon the combination of existing firms and their effect on blank
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Competition
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If the government continues to regulate a natural monopoly after the conditions of natural monopolies have ended than those harmed will include
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Customers and potential entrants
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Consumers put a low value on blank blank output
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Additional Farm
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An industrial advanced economies the price elasticity of demand for agricultural products is blank
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Low
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Additional farm products are subject to rapidly diminishing blank blank
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Marginal utility
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In the market for farm products government price floors cause customers to lose through
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Lower consumption higher prices and tax burdens
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Products such as wheat milk and sugar are heavily blank through federal government programs
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Subsidized
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Technological advance and inelastic Demand with respect to income are the reasons why
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Agriculture has been a declining industry
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In the United States agriculture is a declining industry and the farm share of GDP has declined from about blank percent in 1952 blank percent today
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7 , 1
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Once a certain income level has been reached
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An individuals food consumption rate becomes relatively fixed
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The causes for price and income instability in the agriculture industry include
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Decreases in demand fluctuations in farm output increases and demand and inelastic demand for agricultural products
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The blank for farm products has increased slowly because it is inelastic with respect to income
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Demand
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The main element of blank is to prop up prices and income
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Farm policy
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A price floor set above equilibrium price results in a blank
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Surplus
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Farmers benefit from blank
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Price support
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Society loses from agricultural price supports because they create blank inefficiency by encouraging and overallocation of resources to agriculture
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Allocation
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Blank blank refers to the proper and efficient allocation of resources that produces the correct mix of goods and services desired by Society
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Allocative efficiency
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Why are increases in the demand for agricultural products failing to keep Pace with the technologically created increases in the supply of farm products
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Consumer income population growth
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A blank demand for agricultural products together with fluctuations in farm blank and the blank curve are the reasons for price and income instability in the agriculture industry
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Inelastic output demand
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What causes Farm output to fluctuate from year to year
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Insect damage Frost droughts and floods
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Price blank or government and post price for sore minimum prices on select farm products
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Support
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As a result of government price supports on farm products consumers pay blank prices and consume blank farm products
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Higher less
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At higher prices the quantity demanded for goods and services blank
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Decrease
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Some products that are heavily subsidized their federal government programs include
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Wheat sugar and milk
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Blank encourage Nations to erect trade barriers against imported farm products and to dump Surplus farm products on world markets
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Price support
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An unprofitable farmer exits the farming industry in the long run because
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He ensures marginal costs such as variable costs that he cannot cover in addition to fix cost that he must pay even in the short run
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Over time the supply of farm products has blank rapidly because of technological progress
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Increased
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The result of the following equation prices received by Farmers over prices paid by Farmers equals
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The price parity ratio
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What suggest that farmers should abstain a constant ratio of the prices they have received for their farm products and the prices they pay for goods and services in general
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The parity concept
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As a result of inelastic demand for farm products and increase in supply of such products relative to demand creates a persistent downward pressure on
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Farm income and prices
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The concept of blank provides the rationale for government price floors on farm products
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Parity
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High-income Nations devote a lower percentage of their blank to agriculture at the new low-income Nations scope before
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Income and labor force
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Society losses from agriculture price blank because they create allocated efficiency by encouraging and blank- allocation of resources to agriculture
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Floors and over
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An unstable blank in farm output results from government price support on farm products
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Increase
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The blank is the ratio of prices received two prices paid expressed as a percentage
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Parity ratio
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Farm production is relatively insensitive to price changes in the short run because
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Farmers fixed costs are high compared to their variable cost
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The main element of farm policy is any program designed to prop up blank and blank
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Prices and income
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Wants a certain income level has been reached an individual's food consumption rate becomes
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Relatively fixed
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The demand for farm products in the u.s. is
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Price and income inelastic
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Agriculture prices and incomes are volatile in short run because
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an inelastic demand converts small changes in farm output and demand into relatively larger changes in prices and income
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technological progress has generated large blank in the supply of farm products over time
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increase
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in demand for farm products have been modest in the U.S. because demand is inelastic with respect to income and because population growth has been modest
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increases
