Micro Econ Ch. 13-14

In the framework of a Lorenz curve, the final entry in the cumulative income column needs to be ________________.

100%

Under current U.S. copyright legislation, works produced on a for-hire basis and owned by firms enjoy monopoly protection for

95 years from the date of publication.

If a society decides to reduce the level of economic inequality, which of the following sets of tools can it use?

All the tools in the other three answers

To address a common poverty trap problem for many low-paid Americans whose jobs pay enough that a family could lose its eligibility for ________________, yet those jobs don’t offer ________________ either, some states guaranteed that children would not loose their coverage if their parents worked.

Medicaid; health insurance benefits

In the U.S., the formal definition of the poverty line is associated with the name of one person: _____________, whose idea was to _________________.

Mollie Orshansky; define a poverty line based on the cost of a healthy diet

A government program guarantees $18,000 in income, even for those who do not work at all. If the recipient earns income by working, then the $18,000 benefit is reduced by 50 cents for each $1 earned. Will this program eliminate the poverty trap?

No, enacting such a program may still reduce the incentive to work.

When it is costly or impossible to exclude someone who hasn't paid to use a particular good from using it, then that good is classified as being

Nonexcludable

The idea of a poverty line generates few complicated questions. Which of the following denotes such question?

Should the national poverty line be applied in all states?

Antipoverty programs that are set up so that the amount of government benefits will decline substantially as poor people earn more income typically create ________________.

a poverty trap

A complementary approach to supporting R&D that does not involve the government’s close scrutiny of particular R&D projects is to give firms

a reduction in corporate taxes based on amount of R&D performed.

From the Great Depression of the 1930s until 1996, the United States’ most visible antipoverty program was Aid to Families with Dependent Children, which provided cash payments to

all mothers with children who were below the poverty line.

Poverty is measured by the number of people who fall below

all the other three answers are correct.

When a hypothetical company's R&D project is successful, then

competitors may find a way to adapt and copy the underlying idea without incurring R&D costs.

When technology is advancing so quickly, even a patent from, say, two years ago may be ____________, because ____________.

completely outdated; no firm is relying on that technology any longer

The greater inequality of wages can be viewed as a sign that

demand for skilled labor is increasing faster than supply.

Which of the following would some economists be likely to perceive as the most appropriate public policy response to a positive externality created by the development of a highly innovative new technology?

develop ways to provide a greater share of the social benefits to the innovator

Ideally, a patent should cover a long enough period of time for the inventor to ____________, but that period should not be so long that it allows the inventor to ____________.

earn a hearty return; charge a high monopoly price permanently

Government developed a method called ________________ to assist the working poor through the tax system. The amount of the tax break ________________ with the amount of income earned, ________________.

earned income credit; increases; up to a point

Currently, in the United States, poverty rates are comparatively low

for whites and for all those in the other answers

If the 2014 poverty line is based on the amount of money an individual has earned as income, then

government programs that provide non-cash assistance to the poor are not considered.

If a firm's efforts to be technologically innovative will create a positive externality, then that firm will likely

have less incentive to innovate to the extent that the whole of society desires.

If the poverty trap were made even more difficult to overcome because a working mother will have extra expenses like transportation and child care that a nonworking mother will not face, then

her economic gains from working will be even smaller.

A Lorenz curve refers to a graphic illustration of the share of population on the ________________ and the cumulative percentage of total income received on the ________________.

horizontal axis; vertical axis

If some of the products developed by I'mASoftwareCo. must face market competition that can very quickly produce either an identical product or a close substitute for it, then

it may decide against R&D projects of this sort.

With respect to market forces and/or labor markets that determine peoples' wages, which of the following is a true statement?

labor markets create considerable inequalities relating to income

Once it's patent application has been accepted, a firm is able to earn ____________on its product, which ____________.

monopoly profits; offers an incentive for research and development to take place

An individual whose income level is just above the poverty line would most likely be classified as being a member of the ________________.

near-poor

Why did Thomas Edison vow that he would work only on ideas for things that people would buy?

no government would buy his first patented invention.

A public good is a good that is ____________, and thus is difficult for market producers to sell to individual consumers.

nonexcludable and nonrivalrous

If the maintenance fees for a lighthouse are paid in full each year by charging port fees, then the lighthouse is

nonrivalrous and nonexcludable

Some studies done by economists have found that the original inventor receives ________________________ from innovations, while other businesses and new product users receive the rest of the benefit.

one-third to one-half of the total economic benefits

Which of the following mechanisms will increase the rate of return that can be earned by inventors of new technology?

patents, copyrights, and each of the above

When a company allocates funds in new technology and innovations, then:

positive externalities arise.

When reference is made to the ________________, it means the specific amount of income needed for a basic standard of living.

poverty line

For a positive externality, ____________ than the social benefits.

private benefits of an action are less

When a firm invests in new technology, the ____________ that the firm receives are ____________.

private benefits; only a portion of the overall social benefits

Which of the following represents one of the methods that the government uses to promote technology?

protection of intellectual property

A method often used by economists to look at distribution of income in a society's economy involves

quintiles, or dividing a whole group into fifths.

Government has a variety of policies that allow inventors to ____________, such as the granting patents and ____________.

receive an increased rate of return; subsidization of research and development

The group of government programs that provide assistance to the poor and the near-poor is synonymous with which of the following?

safety net

Generally, market competition and technology can

sometimes a or b.

Which of the following is a key requirement imposed under the Welfare Reform Act's new antipoverty program?

states receiving TANF grants must impose work or school attendance requirements

Medicaid is a federal-state joint program enacted in 1965 that provides medical insurance for

the near-poor and the low-income elderly.

When many people decide to act as free riders, then:

the public good may never be provided.

If incomes rise for both low-income and high-income workers, but rise less for the high- income workers,

then poverty will fall and inequality will fall.

One common way of measuring income inequality is to rank all households by income, from lowest to highest, and then

to divide all households into quintiles.

One difficulty with direct government support of R&D is that it inevitably involves government decisions about ____________

which of the vast number of proposed projects are worthwhile

Robert is a widower raising 5 year old twin boys. In 2013, after the plant where he had worked for 10 years shut down, he was able to obtain part-time work that paid him $13,000.00 a year. He receives the earned income tax credit. If Robert receives a raise, so that he will earn $16,350, the earned income credit will be

will not be reduced.