Suppose You Are a Plumber and Plumbers Are Not Required

question 104

Multiple Choice

Suppose you are a plumber and plumbers are not required to be licensed. A government official proposes to license plumbers, with practicing plumbers automatically receiving a license. Under the proposal, new plumbers would have to pass a test in order to receive a license. If the proposed law passes, you can expect

• A)plumbing errors to become a thing of the past.
• B)much additional competition as new entry occurs.
• C)increased respect for your profession.
• D)greater market power and less competition.
• E)lower prices for plumbing services.

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Definitions:

Input Prices

The costs associated with the purchase of the factors of production, including wages for labor, prices for raw materials, and capital costs.

Average Variable Cost

Average variable cost is the total variable cost divided by the quantity of output produced, showing the cost of producing each unit excluding fixed costs.

Short-Run Marginal Cost

The cost incurred by producing one additional unit of a product in the short term where at least one input is fixed.

Renting

The act of paying for the use of something, typically property, land, or a vehicle, owned by another person or company, over a specific period.