The ability of employers to increase their net revenue by paying low wages is limited primarily by
A) federal and state legislation.
B) the fact that net revenue is maximized when marginal revenue equals marginal cost.
C) the other opportunities available to employees.
D) the right of labor unions to strike.
C
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Government failure means that government action reduces market efficiency
Indicate whether the statement is true or false
A potential cause of competitive market failure is symmetric information.
Answer the following statement true (T) or false (F)
When the United States imposed a tariff on imported shrimp, a Vietnamese official said: "If the tariffs are imposed, that will mean fewer shrimp for the U.S. market and higher prices for consumers. So the U.S. government position hurts its own people. That's irrational." The imposition of tariffs by the United States in this case illustrates:
A. the good/bad paradox that what is good economics is always bad politics and vice versa. B. that U.S. consumers are either irrational or altruistic because they are willing to pay higher prices to help the U.S. shrimp industry. C. what the text calls the general rule of political economy, which states that often small interest groups lobby better than large groups. D. that the U.S. government, like all governments, is sometimes irrational.
Exhibit 3A-1 Comparison of Market Efficiency and Deadweight Loss
As shown in Exhibit 3A-1, if the market is in equilibrium, then ____ represents total surplus.
A. ABEFD B. ABEC C. EFG D. BEF