The Decline in the Price of American Goods Is Due

question 2

Multiple Choice

The decline in the price of American goods is due in part to:

• A) agglomeration effects of firms.
• B) declines in productivity.
• C) trade barriers that allow domestic firms to lower prices.
• D) globalization and increased trade.

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Definitions:

Monopoly Wage Rate

The wage setting behavior of a monopolist employer who might set wages below competitive levels due to lack of competition in the labor market.

Competitive Wage Rate

The equilibrium wage set in a market where the demand for labor meets the supply, with no individual employer able to influence the wage rate.

Bilateral Monopoly

A bilateral monopoly occurs when a market consists of a single supplier and a single buyer.

Monopsonist

A market condition where there is only one buyer or a dominant buyer for a product or service, giving them significant power over prices.