Econ 102 Exam 2

When;

1.) There are many firms

2.) They sell similar (Not Same) products

On a graph of Price= X axis & Quantity= Y axis, Demand is constant/a straight horizontal line

Where companies must make decisions & then receive payoffs based on what other companies decide to do (either cooperate, or pursue self-interest)

There is no competition here, bc the companies come together

Where are the games from cooperation are larger then the rewards from pursuing self-interest

When 2 businesses come together, the 2 businesses have to be about the same in size to come together

-They both involve combining

-Although, Merger is 2 firms same size (or one is buying the other out) merging/coming together,

& Aquisition is where a firm, mostly bigger, buys out another, mostly smaller

Where a firm aquires, buys out another

Restrictions, by gov., on combining industries

It's just adding the top 4 industry market share, from a list of companies

If the top 4 (2, or 3) own 90% or higher of the shares of the industry combined

Requires a dealer who buys from a manufacturer to sell for at least a certain minimum price

An agreement that a dealer will sell only products from 1 manufacturer

A situation where a customer is allowed to buy one product only if the customer also buys another product

A situation in which multiple products are sold as one

When regulators permit a regulated firm to cover its costs and to make a normal level profit

When the regulator sets a price that a firm cannot exceed over the next few years

In Natural Monopolies, gov. can only regulate, not control

Can be Negative or Positive, but they are basically are side effects

(negative ex: pollution from buisnesses affecting 3rd party groups)

(positive ex: a bee farm's bees pollinate a flower farm's flowers)

Tax imposed on the quantity of pollution that a firm emits (incentive to reduce pollution)

Laws that specify allowable quantities of pollution & that also may detail which pollution-control technologies one must have (gov. commands them to decrease pollution, & controls it by requiring them to install anti-pollution equipment, etc.)

(ex: cap-&-trade) A permit that allows a firm to emit a certain amount of pollution (firms can sell & buy permits)

Economic output high, environmental protection is low. Vise-versa

By Production Possibilities Fronteir (PPF) line

-unemployment, if minimum wages were set very high

X axis= Quantity Wages, Y axis= Quantity Labor, & on graph are Supply Labor positive line & Demand Labor negative line

X axis= r (interest rate), Y axis= quantity of financial capital. Supply of Lenders is positive slope, & Demand of Borrowers is negative slope

When there's only 1 employer/only 1 buyer of labor (they hold market power)

Where workers can also have market power, basically opposite to monopsony

When, only, workers who have the same position, & skills set, are treated differently

-Affirmative Action

Pros: -immigrating country can gain skilled workers

-More ppl in immigrating country result in contributing taxes

-home country gains in GDP increase with money sent home from immigrants

Con: -home country can lose skilled workers

-More ppl in immigrating country result in job displacement for primitive citizens

Overall, the benefits of immigration outweigh the costs

How easy it is to use it to pay for goods & services

(ex: money is more liquidable than stock)

How much a project or an investment is expected to return to the investor, either in future interest payments, capital gains, or increased profitability

The total rate of return, including capital gains & interest paid on an investment at the end of a time period

A measure of the uncertainty of that project's profitability

(default risk & interest rate risk)

A direct payment to a firm's shareholders (for stocks)

A specific firm's claim on partial ownership, shares of the company owned by ppl

A financial contract where a borrower agrees to repay the amount that it borrowed & also an interest rate over a period of time in the future

A financial gain from buying an asset, like a share of stock or a house, & later selling it at a higher price than bought (the amount of money gained)

The difference is that dividend is for stock payouts gained, & capital gain is a payout gained for anything, from the money spent

Buying stocks or bonds from a wide range of companies to reduce the level of risk (can help to cancel out extreme increases & decreases in value)