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INDUSTRY REGULATION: Government regulation of an entire industry. The most common industry regulation has been in airline, railroad, trucking, banking, and television broadcasting. The objective of industry regulation is for a regulatory agency to keep a close eye on an industry's prices and product to ensure that they don't start a monopoly and take advantage of consumers. Unfortunately more than a few of the regulatory agencies have been prone to work too closely with those they regulate, in large part because regulators move freely between industry and agency. The agency often ends up working for the industry and running what is effectively a legal monopoly that raises prices, prevents competition, and gouges consumers.
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Lesson 21: Factor Demand | Unit 3: The Curve
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Page: 14 of 24
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Topic:
The Hiring Decision
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- The number of workers the firm is willing to hire for production depends on the marginal revenue product of the workers.
- In particular, the firm compares the wage or price paid each worker with the marginal revenue product generated by the worker.
- It will seek to employ workers up to the quantity in which marginal revenue product is at least as much as the wage.
- The story seems quite clear: If the wage the firm pays workers is $20 per hour, then it will hire only 6 employees.
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INFORMATION SEARCH The decision to seek out or produce information based on a comparison of the cost of acquiring the information and the benefit obtained from the information. Efficient information search is achieved with a equality between the marginal cost of search and the marginal benefit of search. Because the marginal cost of search is invariably greater than zero, search effort stops short of acquiring complete information.
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GRAY SKITTERY
[What's This?]
Today, you are likely to spend a great deal of time flipping through mail order catalogs looking to buy either a genuine down-filled comforter or a 200-foot blue garden hose. Be on the lookout for high interest rates.
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This isn't me! What am I?
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There were no banks in colonial America before the U.S. Revolutionary War. Anyone seeking a loan did so from another individual.
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"Old age isn't so bad when you consider the alternative. " -- Cato, Roman orator
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BNA
Bureau of National Affairs
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