27 Regulation and Antitrust Policy

• Distinguishing between economic regulation and social regulation was one of the reasons Congress assigned the agencies to do.
• Explain the main rationales for vegetable, and meat items with their nation of regulation of industries that are not inherently monopolistic origin after Congress ordered the USDA to regulate the prices charged by natural.
• The FDA has been ordered by Congress to come up with alternative theories for a regulation requiring restaurant chains to explain the behavior of regulators.
• The FDA argued that the laws and regulations would increase the agencies' operating costs.
• The benefits and costs of government regulation will be explained in this chapter.

• In a recent year, the U.S. Congress enacted a number of laws that went into effect.

• Government regulators contend that they will promote economic efficiency and benefit consumers by inducing U.S. industries to operate in certain ways.

• The cost to comply with these regulations is over $1 trillion.

• Early in the nation's history, the U.S. government began regulating social and economic activity.
• Since 1970, the amount of government regulation has grown considerably.
• In 2005 dollars, regulatory spending by federal agencies has generally trended upward since 1970 and has risen considerably since 2000.
• New national security regulations following the 2001 terrorist attacks in New York City and Washington, D.C. have fueled a significant portion of this growth.
• The increase in spending is related to an increase in regulatory enforcement by the federal government.
• According to this measure, the scope of new federal regulations has generally increased since the 1980s.

• There are two types of government regulation.
• In the 1970s, federal government regulatory spending rose sharply, but then fell in the 1980s and now spends more than $50 billion a year.
• State and local spending is not shown.

• Natural monopolies that experience lower long-run average costs as their output increases are regulated by market structure, resource allocation, and governance.
• Financial services industries and interstate transportation industries are examples of nonmonopolistic industries that are subject to government regulation.
• Federal and state governments impose various occupational, health, and safety rules on most businesses.

• The aim of most economic regulation in the United States was to control prices in industries considered to be natural monopolies.
• Federal and state governments have sought to influence the characteristics of products or processes of firms in a variety of industries.

• Natural monopolies have tended to have restrictions on their prices.
• The rates of electrical utility companies and some telephone operating companies are regulated by various public utility commissions.

• The prices charged by firms in many other industries that don't have the same long-run average costs have also been subjected to regulations.
• In the United States, every state has a government agency that regulates the prices that insurance companies charge.

• Government regulations establish rules for production, product features, and entry and exit within a number of nonmonopolistic industries.
• The securities, banking, transportation, and communications industries are regulated by the federal government.

• Securities markets are regulated by the Securities and Exchange Commission.
• Commercial banks and savings banks are regulated by the Federal Reserve, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation.
• Credit unions are supervised by the National Credit Union Administration.

• The Federal Motor Carrier Safety Administration regulates the trucking industry.
• The Federal Communications Commission has oversight powers.

• Economic regulation only applies to certain industries, whereas social regulation applies to all firms in the economy.
• The aim of social regulation is a better quality of life through improved products, a less polluted environment, and better working conditions.
• Product safety, advertising, and environmental effects have been regulated by the government since the 1970s.
• Major federal agencies are listed in Table 27-1 on the facing page.

• Air pollution and the water supply in some cities are known to be hazardous.
• Society might benefit from cleaning up pollutants.
• Broad social regulations also involve costs that we all pay, and not just as taxpayers who fund the regulatory activities of agencies such as those listed in Table 27-1.

• Responsible for preventing FTC businesses from engaging in misleading advertising, unfair trade practices, and monopolistic actions.

• Investigates complaints of discrimination based on race, religion, gender, or age in hiring, promotion, firing, wages, testing, and all other conditions of employment.

• The EPA has ronmental standards for air, water, waste, and noise.

• The answers can be found on page 617.

• The occupational, health, and safety rules that are used in all industries are considered monopolies because they cover services provided by electric, gas, and other utilities.

• The so-called monopoly problem was supposed to be solved by government regulation of business.
• Appropriate regulations for natural monopolies were of particular concern.

• When a single firm can produce all of an industry's output at a lower per-unit cost than other firms, there is a natural monopoly.
• Economies of large-scale production exist in a natural monopoly, leading to a single-firm industry.

• An unregulated natural monopolist will produce to the point at which marginal revenue equals marginal cost.

• This price is above marginal cost, so it leads to a socially inefficient allocation of resources by limiting production to a rate below that at which price equals marginal cost.

• This is in a panel.

• If the monopolist had to engage in marginal cost pricing, it would result in a loss for the firm equal to the shaded rectangular area in panel.
• The profitmaximizing monopolist would go out of business.

• Regulators can't force a natural monopolist to engage in marginal cost pricing.
• Regulation of natural monopolies often allows the firm to set price at the point at which the long-run average cost curve intersects the demand curve.

• The average cost of providing products to consumers is reflected in regulation.

• The electricity, natural gas, and telecommunications industries have been making money.

• All three industries use large networks of wires to transmit their products to consumers.
• As the output rates of firms in these industries increased, the average costs of providing electricity, natural gas, and telecommunications declined.
• The industries were treated as natural monopolies by the governments and were subject to forms of cost-of-service and rate-of-return regulation.

• Electricity is provided to homes, office buildings, and factories in Houston by 15 different companies.

• Electricity is sold in New York City by eight different firms.

• Producers of natural gas and electricity had exclusive ownership of the wire networks that provided energy for homes, office buildings, and factories.
• Various regulators have separated the production of electricity and natural gas from the distribution of these items to consumers.

• Multiple producers in the U.S. now pay to use wire and pipeline networks to get their products to buyers.
• Regulatory commissions impose cost-of-service or rate-of-return regulations on the network owners, and economies of scale still exist in these distribution networks.
• The markets for the products that consumers actually use in their homes and businesses are open to individual producers of electricity and natural gas.
• The market clearing rates that consumers pay to consume electricity and natural gas reflect both the costs of producing these items and the transportation costs that producers pay to deliver them via regulated distribution networks.

• Regulators began to apply the same principles to telecommunications services as the production and sale of electricity and natural gas became more competitive.

• In the 1980s, the FCC required AT&T to open its phone networks to competitors.
• Federal, state, and local regulators applied the same principles to local telecommunications services.
• Many U.S. cities and towns are served by two or more competing producers of wired phone services.

• The cost structure of the telecommunica tions industry was changed by other forces.
• The costs of providing wireless telecommunications were greatly reduced during the 1990s.
• Most people and businesses thought that cellphone services were not as good as wire-based telecommunications.
• The use of cellphones slowed the growth of demand for traditional wire networks.

• Most cable television companies now offer Web-based access.

• Anyone with access to the Internet can purchase Web phone services from many other companies.

• The unraveling of conditions that created this particular market structure has led to a decrease in the scope of the government's role as regulator of natural monopolies.
• Government agencies apply traditional cost-of-service or rate-of-return regulations in many U.S. electricity and natural gas markets.
• The government's main role in regional markets is to enforce property rights and rules governing the regulated networks that serve competing electricity and natural gas producers.

• As more and more households and businesses substitute cellular and Web-based phone services for wired phone services, the rationale for a governmental regu lator role is rapidly dissipating.
• Consumers have stopped using land phone lines.
• Each year, phone signals stop flowing on 3 percent of existing lines.

• Telecommunications has become a free-for-all.
• The industry is not a natural monopoly.

• The answers can be found on page 617.

• The concept of natural monopoly is less relevant because of a natural monopolist.
• In the price equal to long-run marginal cost will sustain long electricity, natural gas, and telecommunications indus run losses and shut down, regulators typically allow tries, production increasingly is accomplished by natural monopolists to charge prices that just cover ous competing firms Normally, regulators have done that.

• One of the main purposes of governments is to protect the interests of their citizens.
• The main rationale for governmental regulatory functions is protecting consumer interests.

• The idea is that the buyer alone is responsible for assessing a producer and the quality of the items it sells before agreeing to purchase the firm's product.
• Various federal agencies require companies to meet minimal standards in their dealings with consumers.
• A few years ago, the U.S. Federal Trade Commission assessed monetary penalties on toys " R " Us and kbb toys because they failed to ship their goods in time for christmas A few decades ago, such a government action wouldn't have happened.

• The rules of the game for firms and consumers are dictated by federal agencies.
• Almost every aspect of the delivery of services by airline companies is overseen by the FAA.
• The FAA regulates the process by which tickets for flights are sold and distributed, oversees all to view a flight operations, and even establishes rules for returning full list of regulations put into place by the luggage after flights are concluded.

• Heavy government involvement in overseeing and supervising nonmonopolistic industries has two rationales advanced.
• Governments may regulate industries that create negative externalities if pollution is present.

• This term refers to situations in which a producer has information about a product that the consumer does not.
• It is possible for administrators of your college or university to know that another school in your vicinity offers better quality degree programs.
• It wouldn't be in your college or university's interest to give out this information to people who are interested in pursuing degrees in those fields.

• Consumers trying to assess product quality in advance of purchase can be affected by asymmetric information problems.
• Individuals contemplating buying a company's stock, a municipal bond, or a bank's certificate of deposit in an unregulated financial market might find it difficult to assess the associated risks of financial loss.
• If the air transportation industry is not regulated, a person might have trouble determining if one airline's planes are less safe than those of other airlines.
• In an unregulated market for pharmaceuticals, parents might be concerned about whether one company's childhood-asthma medication could have more dangerous side effects than other firms.

• Most of the available products are of low quality in extreme cases.
• The market for used automobiles is an example.
• Some owners know that their cars have been well maintained.
• Others have not kept their autos in good repair and are aware that they will be susceptible to more than normal mechanical or electrical problems.

• Half of the used cars for sale in your local used-car market are high-quality autos.
• Half of the cars are known as "lemons," which are likely to break down within a few months or even weeks.
• If a consumer is willing to pay $20,000 for a particular car model if it is in excellent condition, but not if it is a lemon, then they will only pay $10,000 for it.
• People who own lemons are willing to sell their lemons at any price, but people who own high-quality used cars are only willing to sell at a price of at least $20,000.

• In this example, only lemons will be traded, at a price of $10,000, because owners of cars in excellent condition will not sell their cars at a price that prospective buyers are willing to pay.

• This problem is not limited to the used-car industry.
• Any product that is difficult for consumers to fully assess is susceptible quality in an industry.

• Firms that sell high-quality products can address the lemons problem.
• Product guarantees and warranties can be offered by them.
• To help consumers separate highquality producers from incompetent or unscrupulous competitors, the high-quality producers may work together to establish industry standards.

• External product certification may be sought by firms in an industry.

• They can ask for scientific reports to support proposed industry standards and witness that products of certain firms meet those standards.
• Firms can hire outside companies or groups to issue product-certification reports.

• Private market solutions such as warranties, industry standards, and product certification are insufficient because governments have concluded that asymmetric information and lemons problems are rationales for regulation.
• To address asymmetric information problems, governments may offer legal remedies to consumers or enforce licensing requirements.
• In some cases, governments go far beyond simple licensing requirements by establishing a regulatory apparatus for overseeing all aspects of an industry's operations.

• The Federal Trade Commission can impose penalties for product failures, which can provide consumers with protections similar to guarantees regulations intended to protect consumers.

• Congress passed a mail-order statute in the early 1970s that allowed the FTC to charge toy companies for failing to meet pre- Christmas delivery dates.
• The mail-order law made the toy companies' delivery guarantees legally binding.

• The FTC applied the law in this case, but any consumer could have filed a lawsuit under the terms of the statute.

• Federal and state governments are involved in consumer protection by issuing licenses to firms that are legal to produce and sell certain products.
• The governments of nearly half of the states give the right to sell caskets only to people who have a mortuary or funeral director's license.

• Licensing requirements can limit the number of providers and limit the sale of low-quality goods.
• In Chapter 24, you learned that these requirements can make it easier for established firms to act as monopolists.
• If governments rely on the expertise of established firms for assistance in drafting licensing requirements, these firms have strong incentives to recommend low standards for themselves but high standards for prospective entrants.

• Liability laws and licensing requirements can be insufficient to protect the interests of consumers.
• A government may decide that lemons problems in banking are so bad that consumers will lose confidence in banks, and bank runs may occur.
• Similar rationales may be used to establish economic regulation of other financial services industries.
• It may apply consumer protection rationales to justify the economic regulation of additional industries.

• The government can make sure that con sumers are protected from incompetent producers of foods and pharmaceuticals.

• The government may decide that a host of other products meet consumer protection standards.
• It is possible that the people who produce the products also have to ensure workplace safety.
• The United States and most other developed nations have seen widespread social regulation emerge in this way.

• The answers can be found on page 617.

• When problems are most severe, the market for quality products should be the priority.

• A common justification for government regulation is to protect consumers from adverse effects of requirements.

• Firms have to abide by government regulations.
• Businesses engage in a number of activities intended to avoid the true intent of regulations or to bring about changes in the regulations that government agencies establish.

• Sometimes individuals and firms respond to a regulation in a way that is in line with the law, but undermines its spirit.

• After a regulation is put into effect, individuals may violate the law but still comply with the letter of the law.
• The law's effects are lessened if a regulation requires spirit.

• The feedback effect makes parents less concerned about how many sweets their children eat.

• The food industry's oil was exposed during the mid-2000s.
• When hydrogen is added to veg, it creates fat with no trans fats.
• The FDA decided to require companies to reveal the human body because of trans fats.
• Many people should be encouraged to use a lot of trans fats in their food products.

• More companies were encouraged to eliminate trans fats.

• The people who enforce government regulations operate outside the market and their decisions are determined by nonmarket processes.
• There are a number of theories about regulators.
• Regulation can harm consumers by generating higher prices and fewer product choices, while benefiting producers by reducing competitive forces and allowing higher profits.

• A theory of regulatory behavior predicts that regulators will eventually be captured by the industry they regulate.
• The people who know the most about the special interests of the industry are the people who are already in the industry.
• There are people who have been regulated.

• According to the capture hypothesis, individual consumers of a regulated industry's products and individual taxpayers who finance a regulatory agency have interests too diverse to be very concerned with the industry's actions.
• Special interests of the industry are well defined and organized.
• Future employment with one of the regulated firms is possible because of these interests.
• Regulators have an incentive to support the position of a well-organized special-interest group.

• The FDA was given the authority to regulate the tobacco industry because it would have to stop the distribution of counterfeit tobacco products.
• The legislation allows the FDA to require reductions of tar arettes.
• FDA regulation of the tobacco industry promises to control nicotine, ban the use of certain flavors and ingredients, and restrict the FDA to act in the interests of current tobacco firms.

• Tobacco firms have been identified as the ones that need changes in the proposed laws.
• Some of the industry's key interests are pursued by the FDA.

• There is a theory of regulatory behavior that has a different view of regulators' behavior.
• The aims of regulators are the focus of this theory.
• The main objective of a regulator is to keep his or her job, according to the proposal.
• The regulatory agency must be approved by the legislators who originally established it, as well as consumers of the agency and the regulated industry.
• The regulated industry's products must be taken into account by the regulator.

• The share-the-gains, share-the-pains theory suggests that regulators should worry about legislators and consumers as well.
• Regulators might lose their jobs if industry customers complain about improper regulation.
• The capture theory predicts that regulators will allow electric utilities to raise their rates in the face of higher fuel costs, but the share-the-gains, share-the-pains theory predicts a slower, more measured regulatory response.
• Regulators will allow an increase in utility rates, but they will not be as quick or complete as predicted by the capture hypothesis.
• The agency isn't completely captured by the industry.
• The views of consumers and legislators have to be considered.

• It is difficult to put a dollar value on safer products, a cleaner environment, and better working conditions.
• Over time, the benefits of most regulations accrue to society.

• It is difficult to measure the costs of regulation.
• About 5,000 new federal and state regulations are issued each year.
• Taxpayers in the U.S. pay more than $50 billion per year to staff regulatory agencies with more than 250,000 employees.

• Businesses have to devote resources complying with regulations, develop creative responses to regulations, and fund special-interest lobbying efforts.
• It can be difficult for companies to comply with one regulation without violating another, and they have to figure out how to avoid legal tangles.

• According to the Office of Management and Budget, annual expenditures for businesses in the US amount to more than $700 billion a year.

• This estimate does not include the costs of satisfying regulatory demands.
• It ignores the costs of opportunity.
• The owners, managers, and employees of companies could be doing other things with their time and resources.
• According to economists, the opportunity costs of complying with federal regulations may be as high as $300 billion per year.
• Higher prices are passed on to consumers.

• Government regulacy in the United States probably exceeds $1 trillion per year.
• This figure imposes costs on regu only for federal regulations.

• The cost of regulation in the United States is more than $1.75 trillion a year.

• The answers can be found on page 617.

• Direct affected are the costs of regulation.

• The aim of the U.S. government is to encourage competition.
• Congress has tried to legislate against business practices that it believes to be anticompetitive.
• This is the main idea behind antitrust legislation.

• There will be no restriction of output and no monopoly prices if the courts can prevent colluding among sellers of a product.
• The prices of goods and services will be close to their marginal social costs.

• There are four antitrust laws summarized in Table 27-2 on the facing page.
• The Sherman Act is the most important of these.

• The Sherman Antitrust Act was the first attempt by the federal government to control the growth of monopoly in the United States.

• This act is vague.
• The act was used to prosecute the Standard Oil Trust of New Jersey.
• Any contract, combination, or conspiracy to restrain trade or commerce within the United States or across U.S. is subject to the Sherman Antitrust Act of 1890.

• Any person who attempts to monopolise trade or commerce will be held criminally liable.

• The act of 1914 prohibits certain business practices.
• When price differences are not due to actual differences in selling or transportation costs, then discrimination in prices is banned.
• A company cannot sell goods if the purchaser must only deal with that company.
• Corporations can't hold stock in other companies if this will decrease competition.

• cutthroat pricing intended to drive rivals from the marketplace is one of the business practices that reduce the extent of the 1914 petition.
• The Federal Trade Commission was established to make sure that unfair methods of competition in commerce are not allowed.
• Deceptive business practices were added to the list of illegal acts.

• Chain stores are accused of driving smaller competitors out of the marketplace.
• If these actions substantially reduce competition, price discrimination through special concessions in the form of price or quantity discounts, free advertising, or promotional allowances granted to one buyer but not to others, is forbidden.

• More than 80 percent of the nation's oil refining capacity was controlled by it.

• Standard Oil of New Jersey was forced to break up by the Supreme Court because they didn't have a choice.

• The Sherman Act was enacted more than a century ago.
• The Sherman Act was violated by the producers of the computer chips when they colluded to fix the price of the chips.
• The Sherman Act violation was paid for by the company.

• The Sherman Act of 1914 was clarified by the Clayton Act, which identified certain business practices that were to be legally prohibited.

• The Federal Trade Commission Act was passed in 1914.
• The Federal Trade Commission was established to investigate unfair trade practices, as well as certain business practices that involved overly aggressive competition.
• The FTC was given the power to regulate advertising and marketing practices by U.S. firms because of a 1938 amendment to this law.

• The Robinson-Patman Act of 1936 amended the Clayton Act in order to drive smaller competitors out of business.

• Labor unions, public utilities, electric, gas, and telephone companies are exempt from antitrust legislation.

• When these issues actually surfaced in the 2000s, U.S. and European antitrust authorities learned that these are not just rhetorical questions.
• Growing international linkages among markets for many goods and services have made antitrust policy a global undertaking.

• The main goal of antitrust policies is to protect proposed mergers under antitrust laws.

• This is a formal objective of the EU antitrust authorities.

• Tension has been created between the U.S. and EU.
• The concern of antitrust authorities in the United States is caused by the increasing dominance of a single firm.
• If they determine that the increased market dominance arises from factors such as exceptional management and greater cost efficiency that ultimately benefit consumers by reducing prices, U.S. authorities typically will remain passive.
• Regardless of what factors might have caused the business's preeminence in the marketplace or whether the antitrust action might have adverse implications for consumers, they must do so.

• The answers can be found on page 617.

• The Federal Trade tract and combination in restraint of trade was established thanks to the first national antitrust law, the 1914 Antitrust Act of 1890.

• The __________ Act of 1914 made it illegal for large producers to drive out small competitors.

• The largest antitrust fine in history was imposed on Intel, which makes and sells 80 percent of the chips that power desktop computers.

• The second-largest producer, Advanced Micro Devices, accounts for between a legal settlement and Intel paying another $1.25 billion to it.
• 10 and 11 percent of the microprocessors produced worldwide will be profits of the firms.

• The average price of a chip fell from 2000 to 2008 and consumers were paying more for it.
• The antitrust suit was filed in Europe.

• In the United States, most enforcement is based on the Sherman Act.

• monopoly is not defined by the Sherman Act.
• Monopoly doesn't need to be a single entity.

• monopoly is not a function of size alone.
• A "mom and pop" grocery store can be a monopolist.

• It is difficult to measure market power.

• If the market's share of the relevant market is 70 percent or more, it's considered a particular market.
• The rule of thumb is to use firm supplies as the primary measure, but not an absolute requirement.
• A smaller share may be held to monopoly power.

• All items produced by different firms have the same attributes.
• It is possible to substitute products that are not the same for one another.
• Coffee may be replaced with tea.
• The degree to which products are interchangeable is the key issue in defining the relevant product market.
• The two products are considered to be part of the same product market if one product is sufficiently substitutable for the other.

• The geographic boundaries of the market are the second component of the market.
• The entire United States is encompassed by the geographic boundaries of the market for items that are sold nationwide.
• If a producer and its competitors only sell in a limited area, the geographic market is limited to that area.
• A national firm may have monopoly power in one area but not in another.

• Reduction in marginal cost is one way to prevent monopoly power.
• Not all mergers result in reductions in profit-maximizing production and increases in prices in the markets in which the firm operates.
• A rise in production leads to an increase in mergers.
• There are a number of mergers that result in quantity available for sale.
• The mergers result individual firms incurred before their merger because the combined firm incurs lower marginal cost.

• There is a problem in determining whether a firm has engaged in willful acquisition or maintenance of market power.
• Actions that appear to be good business look like antitrust violations to others.

• A product is being sold in slightly altered forms to different groups of consumers.

• Adobe Acrobat or Microsoft Word are office productivity software programs.
• Firms that sell such programs typically offer either a professional version with a full range of features or a standard version with only basic functions.
• The practice of selling the same product at different prices to different consumers is considered a form of price discrimination by one perspective.
• Computing professionals are likely to use the full range of features in Adobe Acrobat or Microsoft Word.
• Their demand for the full-featured version of an office-productivity software program is likely to be less elastic than most other consumers.
• Adobe and Microsoft can make more money by selling professional versions at higher prices and standard versions at a lower price.

• The price differences that are not a result of different production or transportation costs are not illegal.
• They are not, according to another perspective.
• According to this point of view, consumers think of professional and standard versions of software packages as imperfect replacements.
• Each version is sold in a unique market.
• Versioning increases consumer satisfaction because consumers who are not computing professionals can use certain features of software at a lower price.
• The view of the economic effects of versioning has been taken by antitrust authorities in the United States and other countries.

• There are two or more products for sale.

• If a firm allows consumers to purchase the products individually or as a set, antitrust authorities are usually not concerned.
• They are more likely to investigate a firm's business practices if it allows consumers to purchase only one product at a time.

• A second group of consumers is willing to pay less for the same operating system but more for the internet-browsing program.
• Only consumers in the first group will buy the operating system if the same company sells both types of software at the same price.
• Only the second group of consumers will purchase the Internet-browsing program if it is sold at a price above $100.

• If the firm sells both products as a bundle, it can charge $300 and make sales to both groups.
• The first group pays $200 for the operating system, while the second group pays $100.
• The first group paid $100 for the Internet-browsing program, while the second group thought the price was $200.

• The software company can engage in price discrimination by charging different prices to different groups.

• The Justice Department applied this interpretation in their prosecution of Microsoft, which for years had bundled its Internet-browsing program, Internet Explorer, with its Windows operating system.
• Enforcement officials said that Microsoft had monopoly power in the market for computer operating systems.
• They argued that Microsoft wanted to price-discriminate and to extend its monopoly power in the market for internet-browsing software.
• The courts ordered Microsoft to change some of its practices.
• Microsoft was required to unbundle its products as part of the legal remedy.

• The answers can be found on page 617.

• As part of the enforcement of antitrust laws, officials at the Antitrust authorities generally have not considered product U.S. Department of Justice and the Federal Trade The U.S. authorities have raised something.

• The gathering on a recent Friday did not go well.

• The Cecilia Catholic Church in Rochester, Pennsylvania, was affected by the ban on pies.
• There had been an inflow of revenues from pie sales.

• The state inspector's action was dubbed "piegate" by a local off well when a large number of parishioners turned out for the reporter's raised public awareness of the church's Friday night fish-fry dinner.
• She brought pumpkin and fry dinners.
• The dinners provide funds for the church's charity work, and more people began to attend, boosting revenues berry pies, which were set out beside Louise Humbert's raisin pie, from the dinners.

How does the experience of this nonprofit church help the Department of Agriculture when it comes to complying with the state's food safety rules?

• A long list of regulations for the food industry was added by the federal government in the late 2000s.
• The rules governing food labeling at N Regulation Compliance Costs were phased in during the early 2010s.

• The costs of adding calories to the menu are included in the grocery food-labeling regulation.

• Large supermarkets are covered by the benefits of the labeling law.
• Firms that face the food-labeling law have to add labels indicating the country of origin of all supermarkets.
• Adding beef, chicken, fruit, lamb, pork, and vegetable products is supported by most studies.

• The regulatory feedback effect is significant and the costs of complying with the rule are not small.

• According to the studies, consumers who responded to $26,000 per store to put systems into place to assure calories in restaurant menu were less likely to comply with the labeling requirement.
• The first-year cost of complying with the regulation for "reward" later that same day is estimated by it.
• 7 cents per pound of beef and 4 cents per pound of lamb and pork will be self-rewards.
• It is estimated that the total compliance cost for soci extra desserts is more than $2 billion.

• The health care legislation passed in March of 2010 included the restaurant labeling regulation.

• More than 200,000 restaurants are covered by demand and supply curves.

• The gradual phase-in of the federal rule will be discussed in the study plan for this chapter.

• You should know what to know after reading this chapter.

• Economic regulation includes the regulation of prices charged by natural monopolies and the regulation of certain activities of nonmonopolistic industries.

• Product safety, environmental quality, and working conditions are just some of the issues that are covered by social regulations.

• Uncoupling production of electricity, natural gas, and telecommunications from their distribution has allowed regulators to promote competition in these industries.

• The two most common reasons for regulation of nonmonopolistic industries are to address market failures and protect consumers.
• A lemons problem occurs when uncertainty about product quality leads to markets with mostly low-quality items.
• The lemons problem may be reduced by establishing liability laws and business licensing requirements.

• They regulate the results of feedback.

• The regulation pains theory says that a regulator will try to satisfy all of them.

• Video: Antitrust Laws attempts to monopolize an industry is forbidden by the Sherman Act of 1890.
• Specific types of business practices were not allowed under the Clayton Act of 1914.
• Price cuts were banned by the RobinsonPatman Act of 1936.

• 610 use a market share test to determine tie-in sales, 610 the percentage of market production or sales supplied by a firm within a defined relevant market.
• In recent years, antitrust officials have raised questions about whether product packaging, either in the form of different versions or as bundled sets, is a type of price discrimination involving tie-in sales.

• Log in to MyEconLab, take a chapter test, and get a personalized study plan that tells you which concepts you understand and which ones you need to review.
• MyEconLab will give you further practice, as well as videos, animations, and guided solutions.

• Which of these two aspects of the granted monopoly rights to service a particular sale of electricity remains susceptible to natural territory of a metropolitan area?
• There are problems with the companies.

• The problem you identified in part a might actually arise.

• Discuss two approaches that a regulator could use to try to implement an average-cost-pricing ernment, but that she believes is necessary solution to the problem identified in part a.

• The cost and demand scope of lemons problems are depicted in the table below.

• Support your reasoning by taking a stand.

Is the regulation described in marginal cost at each level?

• If there is only one way that someone who returns the post book industry, in which firms compete both in card and via the internet, gives up protection from telephone solicitation and physical retail stores, then that is what it is.

• If a business has developed a very high charges almost twice as much to deliver a quality product and operates more efficiently in overnight package to any world location as it does producing that product than any other potential to deliver the same package to the same location in competitor, then it will be able to deliver At the moment it is two days.
• There are few company warehouses in destination cities that can accommodate second-day packages for this product.
• Is this firm in violation of the U.S. laws?

• For books sold over the alternative perspectives, summarize thousands of dollars.

• Firms have numbers instead of names.

• A firm that sells both Internet-security software and Antitrust authorities judge that a single firm will have a monopoly power if it has a share of sales in the software as a stand-alone product.
• The market will only sell 70 percent.

• An antitrust authority might view this practice as a form of price discrimination.

• If the antitrust authorities decide that bookselling in physical retail stores and retail internet bookselling are part of the broadly that bookselling in physical retail stores and retail internet bookselling are separate entities, it would be a problem.

• How does the U.S. government apply antitrust laws to the home page of the Antitrust Division of the U.S.

• You can apply for the Department of Justice.

• The authorities consider when evaluating a horizontal merger.

• The company said that it understands why a firm's marginal revenue would replace almost all of the positions by hiring product curve workers located outside the United States.
• Explain in what sense the demand for the mid-1990s, a long list of companies, from labor is a "derived" demand computer manufacturers to commercial banks.
• Why are so many other U.S. companies like IBM?

• The answer to this question will be learned in this chapter.

• The head of the company is a college student.

• We don't care about ideology.

• $4 per hour is more than four times the nation's minimum hourly wage.

• We studied the demand for output the same way as businesses can be.

• Our analysis will always conclude that a firm will hire employees up to the point where it isn't profitable to hire any more.
• The marginal benefit of hiring a worker will be the same as the marginal cost.
• In every profit-maximizing situation, it is most profitable to carry out an activity up to the point at which the marginal benefit equals the marginal cost.
• Remembering that guideline will help you analyze decision making at the firm level, which is where we will begin our discussion of the demand for labor.

• Under the assumption that the market is perfectly competitive, we will begin our analysis.
• We will assume that the market is competitive.
• This gives a benchmark against which to compare labor markets and product markets.

• A firm that sells titanium batteries is in competition with many other firms that sell the same type of product.
• The laborers hired by this manufacturing firm do not need any special skills.
• There is a perfectly competitive market for titanium batteries.
• It buys labor in a competitive market.
• A firm that hires labor under perfectly competitive conditions only hires a small percentage of workers who are available to the firm.
• By "potentially available", we mean all the workers in a given geographic area who have the skills required by our perfect competitor.

• It is possible for the individual firm to hire extra workers without having to pay a higher wage.
• The supply of labor to the firm is elastic because of the forces of supply and demand in the labor market.

• The number of workers per week is shown in column 1.
• In column 3, we show the additional output gained when the company adds workers.

• The firm employs seven workers instead of six and the MPP is 118.
• The law reduces the number of workers.
• After some worker equals the change in total output accounted for by hiring the worker, holding all point, the marginal product predicts that additional units of a variable factor will be added.

• All other nonlabor factors of production are assumed to be constant.

• If our manufacturing firm wants to add one more worker to its production line, it has to crowd all the existing workers closer together because it doesn't increase its capital stock.

• The marginal revenue product is shown in column 4 in panel a.
• The firm gets marginal additional revenue for the sale of additional output.
• $10 per unit is the price of the product.
• The profit-maximizing employer will pay for only 12 workers because the nation of that worker's contribution to production and the revenue that that marginal revenue product is just equal to, is what the weekly wage of revenue product is.

• The wage rate that is established by the forces of supply and demand in the labor market is what we find in panel b.

• At the inter maximization per and W section is where profit occurs.

• Each worker has a fraction of the available capital stock with which to work.
• Adding another worker won't double the output because the machine can only run for so long.
• The law of diminishing marginal product is what causes MPP to decline.

• We need to translate the dollar value of the physical product that comes from hiring an additional worker.
• This is done by taking the marginal revenue of the firm and dividing it by the marginal physical product.
• The marginal revenue is equal to the price of the product because the firm sells titanium batteries in a perfectly competitive market.

• The times page shows the marginal physical product.

• The VMP is the MRP for a firm that is perfectly competitive because price and marginal revenue are the same.

• The marginal cost of workers is the difference between the cost of labor and the cost of production.
• The cost of using more than one unit of an input.

• The marginal change in amount of resource used factor cost of labor is the wage rate.

• The MFC is the same for all workers because they are paid the same wage.
• Because the firm is buying labor in a perfectly competitive labor market, the wage rate of $830 per week really represents the supply curve of labor to the firm.
• The supply curve is elastic because the firm can purchase all labor at the same wage rate.

• In economics, marginal benefits and marginal cost are compared.

• The firm hires workers up to the point at which the additional cost associated with hiring the last worker is equal to the additional revenue generated by that worker.

• This is the point at which the wage rate is equal to the marginal revenue product.
• If the firm were to hire more workers, the wages wouldn't be covered by the additional revenue.
• If the firm were to hire fewer workers, they would not be able to make the contributions that they otherwise could.

• As workers are added, they contribute more to revenue than to cost for the firm.

• The going wage rate is determined by demand and supply in the labor market.

• The demand for labor comes from the demand for the final product.

• Equal quality at $830 per worker is what it wants.
• The firm would not hire 13 workers because using 13 would add only $760 to revenue and $830 to cost.
• The firm would hire an additional worker if the price of labor fell to $760 per worker per week.
• As the wage decreases, the quantity of labor demanded increases.

• The MRP curve is the quantity of labor that the firm will wish to hire at each wage rate, as identified by the individual firm's demand for labor curve.

• Under perfect competition in the product and labor markets, MRP is determined by the MPP times the product's price.

• The input factor demand is derived from the demand for the final product.

• An increase in the market demand for a given product raises the product's price, which in turn increases the marginal revenue product, or demand for the resource.

• The MRP curve changes when the final price of the product is changed.

• The MRP curve will shift to the left if that is the case.
• We are aware that MRP MPP MR.
• If the output price falls, so does the demand for labor.
• The price of labor becomes greater than MRP at the initial equilibrium.
• The firm will hire fewer workers at the same wage rate.
• At different levels of labor use, the marginal revenue product of labor is lower.
• The number of workers hired would be reduced.
• If the output price goes up, the firm will want to hire more workers and the demand for labor will go up as well.

• We pointed out that a change in marginal productivity, or in the marginal physical product of labor, will shift the MRP curve.
• The demand curve for labor will shift to the left if the marginal productivity of labor decreases.
• The MRP will be lower if every quantity of labor is used.
• A lower amount of labor will be demanded.

• The answers can be found on page 641.

• The change in total revenue was caused by a single unit change.

• The demand curve for the one variable factor of production in our example is the downward-sloping portion of each individual firm's marginal revenue product curve.
• When we go to the entire market for labor in a particular industry, we will find that the amount of labor demanded will change with the wage rate.

• The market demand curve for labor in the titanium battery industry shows the quantities of labor demanded by all of the firms in the industry at different wage rates.

• The demand for labor is derived.
• The demand for labor still depends on the wage rate and the price of the final output, even if we hold labor productivity constant.

• The total industry output increases at the present price as all 200 firms increase employment.

• We can discuss the price elasticity of demand for inputs just as we discussed the price elasticity of demand for different commodities.

• Each firm has its own demand curve for labor.

• Time Period demand for goods is the percentage change in the quantity of labor demanded divided by the price of labor.
• Demand is elastic when it is 1.

• Demand is elastic when it is greater than 1.

• The price elasticity of demand is determined by four factors.

• The existence of many competing radish growers puts an extremely elastic demand for radishes on an individual farmer.
• The farmer couldn't pass on higher costs to buyers if the laborers tried to get a wage increase.
• Any wage increase would cause a reduction in the amount of labor demanded by the individual farmer.

• The easier it is for producers to switch to another factor of production, the more responsive they will be to an increase in an input's price.
• If plastic can be used in the production of car bumpers, then a rise in the price of chrome will cause automakers to reduce the amount of chrome they demand.

• Globalization of Tasks and the Elasticity of U.S. Labor Demand is an example of The Labor Market: Demand, Supply, and Outsourcing.

• When a particular input's costs account for a large share of total costs, any increase in that input's price will affect total costs more.
• If labor costs are 80 percent of total costs, companies will cut back on employment more aggressively than if labor costs are only 8 percent of total costs.

• Firms have more time to figure out ways to save on inputs whose prices have gone up.
• Over time, technological change will allow for easier substitution in favor of relatively cheaper inputs and against inputs whose prices went up.
• A pay raise obtained by a strong telephone industry union may not result in many layoffs, but over time, the telephone companies will use new technology to replace more expensive workers.

• The answers can be found on page 641.

• The market demand curve for labor is not a function of the input price elasticity of demand, but of the final output rate and the ease of substituting other output.

• There is a market demand curve for labor.

• The demand curve for labor has been developed in a particular industry.
• The equilibrium wage rate that workers earn in an industry can be determined by adding supply to the analysis.
• There is a supply curve for labor that goes up in a particular industry.

• More workers will want to work in that industry at higher wage rates.
• The individual firm can hire all the workers it wants at the going wage rate because it is a small part of the market.

• There was an excess of workers supplied.

• There will be an excess quantity of workers demanded if the wage is below $830 per week.

• At the intersection of the two curves, the equilibrium wage rate of $830 a week is established.
• If the wage rate fell to $800 a week, there would be an excess number of workers demanded.
• If the wage rate rose to $900 a week, there would be an excess of workers supplied.
• Competition would force the wage back to equilibrium.

• The wage rate for the entire titanium battery industry has been found.

• The equilibrium wage rate must be taken by the individual firm because they are a small part of the total demand for labor.
• Each firm purchasing labor in a perfectly competitive market can purchase all of the input it wants at the going market price.

• We can discuss the effects of shifts in supply and demand in labor markets just as we did in Chapter 3.

• There are many factors that can cause the demand curve to shift.
• A number of them have already been discussed.
• If there is a shift in demand for the final product, the labor demand curve will shift.
• Changes in labor's productivity and changes in the price of related factors of production are two important factors in determining the demand curve for labor.

• The demand for labor or any other variable input comes from the demand for the final product.
• The marginal revenue product is the same as the marginal physical product.

• Any change in the demand for the final product will affect the price and MRP of the input.

• The market demand curve for labor will be changed by a change in the demand for the final product.

• The demand for 22 active volcanoes might not be related to a financial crisis and a volcano.
• The media used translators for their reports on the eruption.
• They are in Iceland.
• In 2008 and 2009, there was a lot of interpretations provided by the translators.
• In relation to the size of the country's result of these two events, the derived demand for services provided by national income has never before been experienced by a country.
• Between 2008 and 2010 there was an increase in this translator.

• Labor productivity is related to the second part of the MRP equation.

• The market labor demand curve will be changed by a change in labor productivity.

• Labor productivity can increase if labor has more capital or land to work with, or if labor's quality has improved.
• The real standard of living in the United States is higher than in most other countries.
• Workers in the U.S. are generally better trained and have more natural resources than workers in other countries.
• The demand for labor in the United States is greater than other things.

• Firms use more than labor.

• Some resources are replacements and some are replacements for the production process.

• The demand for labor will change in the same direction if the price of a substitute input is changed.

• If the price of an input for which labor can substitute as a factor of robotics decreases, the demand for labor falls.

• Capital equipment and labor are comple mentary.

• The demand forlabor will change in the opposite direction if the price of the input changes.

• If the price of machines goes up, fewer machines will be purchased and fewer workers will be used.

• There are a number of reasons that the labor supply curves may shift.
• The supply curve of factory workers in the digital camera industry will shift to the left if wage rates for factory workers remain constant while wages for factory workers in the computer industry go up dramatically.

• Changes in working conditions can affect the labor supply curve.

• The supply curve of labor to the digital camera industry will shift to the right if employers discover a new production technique that makes working conditions more pleasant.

• The position of the labor supply curve is determined by job flexibility.
• When an industry allows workers more flexibility, such as the ability to work at home via computer, the workers are likely to provide more hours of labor.
• The supply curve will shift to the right.

• The answers can be found on page 641.

• The wage rate in the labor supply curve is the same as that of the individual perfectly competitive firm.

• The curve of labor slopes can shift.

• An industrywide supply curve for labor and an industrywide demand curve for labor are plotted.

• Computer technology has made it possible for companies located in another country to get labor services from people at home.
• Sometimes companies based in Canada send financial records via the Internet to U.S. accountants so they can process payrolls and make income statements.
• Some U.S. manufacturers of personal computers and peripheral devices arrange for customers' calls for assistance to be directed to call centers in India, where English-speaking technical-support specialists help the customers with their problems.

• Canadian companies that hire accountants in the U.S. are outsourcing their labor to other countries.
• The country in which the firm is located is used by U.S. computer manufacturers.

• Let's look at each of the questions in a different way.

• The demands for and supplies of labor in the U.S. labor markets determine equilibrium wages and levels of employment.
• The price of a substitute input is one of the factors that determines the market demand for labor.

• The demand for labor is affected by the availability of a lower-priced substitute.

• This economic reasoning has implications for the U.S.

• Technical support for Indian workers was provided by the market wage for U.S. workers.
• The market wage for Indian workers who provide the same employment level is lower than the U.S. market wage.
• The market demand for Indian labor increases in panel.

• The United States is the home country.
• Initially all U.S. firms will only employ U.S. workers.
• Developments in computer, communications, and transportation technologies allow U.S. firms to see the labor of foreign workers as a close substitute for U.S. workers.
• There are demand and supply curves in the U.S.

• The initial equilibrium is 1 The market wage rate in the U.S. is $19 per hour.

• Now suppose that the U.S. is able to use improved communications technologies.

• The wage rate in U.S. dollars is $8 per hour.
• Firms in this U.S. industry will respond to the lower price of substitute labor in India by increasing their demand for labor services in that country and decreasing their demand for U.S. labor.
• The market demand for U.S. labor services decreases.

• When U.S. firms engage in labor outsourcing, the effects are lower wages and less employment in the U.S. labor markets.
• The effects of outsourcing labor are higher in nations where workers reside.

• U.S. firms are not the only ones outsourcing.
• Consider the Canadian companies that hire accountants from the U.S.

• The U.S. accounting services have increased.
• This causes higher wages in the panel.

• The initial market wage for qualified accountants in Canada is $29 per hour.
• The market wage for accountants in the U.S. is $21 per hour.

• After internet access allows companies in Canada to transfer financial data, the services of U.S. accountants become available as a less expensive substitute for those provided by Canadian accountants.
• The demand for U.S. accountants' labor services increases when Canadian firms respond by outsourcing.
• The market wage earned by accountants in the U.S. increases to $23 per hour.
• Canadian firms substitute away from the services of Canadian accountants.
• Canadian accountants' wages go down to $26 per hour.

• In contrast to the situation in which U.S. firms engage in labor outsourcing when foreign firms hire workers in the United States, wages and employment levels rise in the affected U.S. markets.
• Lower wages and decreased employment can be found in nations where firms engage in outsourcing.

• When foreign firms engage in labor outsourcing in the United States, U.S. wages and employment tend to increase.

• The immediate effects of increased worldwide labor outsourcing are lower wages and employment in some U.S. labor markets.

• In labor markets, there are ups and downs in wages and jobs.
• 4 million jobs are created in the United States every month.

• Various groups of U.S. workers earn lower pay or experience reduced employment opportunities as a result of labor outsourcing.
• It is a two-way street.
• Labor outsourcing doesn't just involve the U.S.

• This phenomenon also involves the purchase of labor services from U.S. workers.

• Outsourcing is a way for residents of different nations to conduct trade.
• Some people lose their jobs in the form of lower wages or reduced employment opportunities because of the trade of outsourcing labor services.
• Overall gains from trade for participating nations, such as India, Canada, and the United States, are generated by specialization and outsourcing.

• If the U.S. companies don't engage in international prices and the supply in affected markets is reduced, equilibrium prices for consumers would go up.

• The governments of other nations would likely prohibit the equilibrium wages that U.S. firms pay to obtain labor that they had previously outsourced to U.S. workers.

• The answers can be found on page 641.

• Advances in telecommunications and computer network that hire U.S. labor are making it easier for foreign workers to find work in the U.S.

• In the long run, outsourcing helps U.S. firms to operate demand for labor, market wages, and equilibrium employ more efficiently.
• For U.S. residents, outsourcing is done by foreign firms.

• We've only considered markets that are perfectly competitive in selling the final product and buying factors of production.
• We will assume that the firm buys factors of production in a competitive market.

• We are considering the structure of the output market in relation to the environment of monopoly, oligopoly, and monopolistic competition.
• The demand curve for the firm's product is downwards in all such cases.

• We will refer to a monopoly situation throughout the rest of the chapter.
• The analysis shows that all industry structures are less than competitive.
• The firm could sell all it wanted at a constant price in the past, but this is different.
• The firm we discussed was a perfect competitor.

• The monopolist has to account for both the diminishing marginal physical product and the diminishing marginal revenue.
• The price for the monopolist is always less than the marginal revenue.
• The product demand curve is always below the marginal revenue curve.

• All units can be sold at the going market price for the perfect competitor.
• We assumed that the perfect competitor could sell all the titanium batteries it wanted for $10 per unit.
• A $10 change in total revenues is always caused by a one-unit change in sales.
• It was always equal to $10 for that perfect competitor.
• Multiplying unchanging marginal revenue by the marginal physical product of labor yielded a perfectly competitive firm's marginal revenue product.

• The monopolist can only calculate marginal revenue by looking at the price of the product.
• The monopolist has to cut prices on previous units of output in order to sell the additional output from an additional unit of input.
• Marginal revenue is falling as output increases.
• The underlying concept is the same for both the monopolist and the perfect competitor.
• The benefit is the change in total revenues due to the one-unit change in labor.

• A single monopolist ends up hiring fewer workers than any of the other firms.
• The marginal revenue product for the monopolist varies with each one-unit change in the monopolist's labor input.
• The marginal revenue product curve for this monopolist has been plotted.

• The monopolist hires enough workers to make money.
• The labor demand curve for a perfectly competitive industry is equal to the wage rate.
• Revenue was constant.

• When firms increase employment, their output expands and the product price goes down.
• At any given wage rate, the quantity of labor demanded by the monopoly is still less than the amount of labor demanded by a perfectly competitive industry.

• Our profit-maximizing monopolist will continue to hire labor as long as additional profits result.
• If the additional cost of more workers outweighs the additional revenues made from selling the output of those workers, profits are made.
• The monopolist stops hiring when the wage rate is equal to the additional revenues.
• When the wage rate is equal to the marginal revenue product, the firm stops hiring.

• If we could change the titanium battery industry from one in which there is perfect competition in the output market to one in which there is monopoly in the output market, the amount of employment would fall.
• The declining product price must be taken into account in order to sell more titanium batteries.
• Every firm hires up to the point at which marginal benefit equals marginal cost.
• The marginal benefit to the monopolist of hiring an additional worker is more than just the output of the product.

• Assuming all other factors remain the same, the monopolist ends up hiring fewer workers than all of the perfect competitors.
• This shouldn't come as a surprise.
• The implication was that the titanium battery industry would produce less output than a competitive one.
• The industry would hire fewer workers.

• The demand for variable input labor has been analyzed in this chapter.
• Any other variable factor input analysis is the same.
• The same conclusions could be reached if we talked about the demand forfertilizer or the demand for the services of tractor drivers instead of the demand for labor.
• The price of any variable input will be equal to the marginal revenue product for the entrepreneur.

• The cost-minimizing side of the question can be answered by looking at the profit-maximizing side.

• Assume that you are trying to reduce costs.
• If you spend $1 more on labor, you will get 20 more units of output, but if you spend $1 more on machines, you will only get 10 more.
• The marginal products per last dollar spent on each are equal if you use factors of production.

• To minimize total costs for a particular rate of production, the firm will hirefactors of production up to the point at which the marginal physical product per last dollar spent on each factor of production is equalized.

• More than 10 million U.S. workers are classified as independent contractors of benefits.
• They sell skilled labor services.
• The marginal physical increase in the denominator of the MPP/wage rate ratio for full-time product of the labor of independent contractors has been pushed down relative to the ratio for inde regular full-time employees.
• Firms have responded by hiring fewer full-time employees and more independent contractors in the past.

• The firm will never use a factor of production unless the marginal benefit from hiring that factor is at least equal to the marginal cost.
• The marginal benefit is the change in total revenues due to a single unit change in utilization of the variable input.
• The wage rate is the price of the variable factor in the case of a firm buying in a perfectly competitive market.

• The marginal revenue product of a firm's resources must be the same as the price.
• If the MRP of labor is less than $20, the firm will hire more workers.

• There is an exact match between the profit-maximizing combination of resources and the least-cost combination of resources.
• The same cost-minimizing rate of utilization can be achieved by either rule.

• The answers can be found on page 641.

• To minimize total costs for a given output, the profit ginal revenue is more important than the price.

• To maximize profits, the marginal product of when each factor is used up to the point at which its MRP each resource must equal the resource's __________.

• The demand for robotic inputs is increasing at warehouses operated by the office supply retailer, according to an executive.
• The useful for smaller and smaller tasks is powered by humans and a lead-acid battery.
• At 3 miles per hour, robot manufacturers have not been moving around a warehouse.
• The robot has been able to design machines that can pack items into boxes as well as humans can, but is it possible that it will be able to do so by scanning a grid of floor stickers?

If a cost-reducing technological improvement delivery boxes and load the boxes onto trucks, what will happen to the demand for human warehouse workers?

• IBM plans to lay off about 5,000 U.S. employees and move most of those jobs to India.
• Customer support via call centers was involved in many of the affected positions.
• A long list of U.S. firms, including personal N Derived Demand for Labor computer manufacturers, financial services companies, and media firms, have opted to outsourcing labor abroad.

• A key consideration in outsourcing is the marginal revenue product, which is the difference between the input's marginal revenue product and the marginal physical product of the country.

• The market clearing wage in call-center outsourcing deals with U.S. firms is that of the revenue product of labor, which is the point at which the marginal Indian workers often "win out" over.
• The majority of Indian workers are proficient in English.
• Wage differences greater familiarity with English increases Indian workers' across countries.

• It is another concern when making international comparisons.
• Indian isons of the constant-quality marginal physical product of call-center workers often gain outsourcing employment labor is distance.
• The more distant a firm is from the U.S., the lower the wages it pays workers in other countries.

• Wages paid to call-center agents are different in different countries.

• Indonesian call-center workers' wages are lower than those of call-center workers in India, so it makes sense to go to www.econtoday.com/ch28.

• Discuss key issues that a U.S. firm faces when attempting to workers in the United States and wages of workers in a compare constant-quality marginal physical product of workers number of other countries.

• You should know what to know after reading this chapter.

• The marginal revenue product curve slopes downward because of the law of diminishing marginal marginal factor cost product.

• The marginal factor cost of labor is equal to the total input costs for employing an additional unit of labor.

• Marginal revenue product curves shift as product market conditions change.

• The demand for labor comes from the demand for final products.

• The percentage change in the input's price is determined by the amount of input demanded divided by Demand Elasticity for Inputs.
• The price elasticity of demand for the final product is relatively high and it is easy to substitute other inputs in production.

• Demand for Labor is equal to the quantity of labor supplied by all workers in the competitive labor market.
• The Economics Video: Rust Belt own labor demand curve to determine how much City's Brighter Future labor to employ.

• The U.S. labor markets are mixed.
• U.S. outsourcing

• Firms reduce the demand for labor in the US.

• The demand for outsourcing is bad for America labor in related U.S. labor markets.

• If a monopolist competes for labor in a competitive labor market, it takes the market wage rate as given.
• The left of the labor demand curve would have arisen in a competitive industry.
• If the industry were perfectly competitive, there would be fewer workers employed by a monopolized industry.

• Log in to MyEconLab, take a chapter test, and get a personalized study plan that tells you which concepts you understand and which ones you need to review.
• MyEconLab will give you further practice, as well as videos, animations, and guided solutions.

• The table depicts the output of a firm.

• The printers cost $100 each.

• A new manufacturing technique makes it easier for hog farmers to use corn as a substitute for labor.

• There has been an increase in the number of substitute products used for the final product.

• There is a perfectly competitive labor market.

• 5 units per hour is the average for a new education program administered by the last unit of labor.
• The company raises labor's marginal product.

How much does the firm make from workspace and new machinery?

• The firm competes in a perfectly competitive petitive labor market in which the market wage labor market is $20 per day, and the market wage it faces is rate.
• $100 per worker per day if the firm maximizes profit.

• The skills of welders are required for the rental ucts.
• The welding rate of land is $1,000 per unit, and the rental rate is a dirty and dangerous job compared with other capital.
• In the past few years, fewer production managers have sought employment as welders because of their current allocation of factors.
• The marginal physical product of the market for the labor of welders is depicted in a diagram.
• The marginal physical product of land gram is 100, and the marginal physical product of recent trends for the market clearing wage earned capital is 4,000.

• A significant capital has been $500 since the early 2000s.

• Pick the report for the most recent period if you divide the class into two groups.

• The section deals with prices and within the district.
• Take the reports and compare them.

• You can answer the following questions.