Microecon Exam 3

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Workers on the night shift at a factory earn more per hour than workers on the day shift, although their human capital and productivity are the same. This is an example of:

a compensating differential

A tax designed to induce people to take account of the negative externalities that they cause is referred to as _____ tax.

a corrective

When a good is nonrival and nonexcludable, the good is referred to as:

a public good

An efficiency wage is NOT _____ but rather _____.

a reward; an incentive

An externality is defined as:

a side-effect of an activity that affects bystanders whose interests are not taken into account

The marginal revenue product of labor is equal to:

MP(L) x P

A signal is:

an action taken to credibly convey information that is hard for someone else to verify

What is an example of statistical discrimination?

an employer relies on stereotypes in making hiring decisions

A characteristic of oligopoly that is not present in any other market structure is that there

are a small number of sellers with considerable market power

When a company has market power, it is _____ in its market.

not a price-taker

The marginal private benefit curve is also the:

demand curve

The labor demand is a/an _____________ demand

derived

A compensating differential is a:

difference in wages that offsets the desirable or undesirable aspects of a job

What is a higher wage paid to encourage greater worker productivity?

efficiency wage

The marginal product of labor is the

extra production that occurs from hiring an extra worker

When a seller is able to differentiate its product successfully, the seller

gains market power

The accumulated knowledge and skills that make a worker more productive are known as:

human capital

There is evidence that, despite antidiscrimination laws, discrimination _____ in labor markets.

impacts wages

When someone can enjoy the benefits of a good without bearing the cost, the good:

is subject to the free-rider problem

The supply curve of a firm is also its _____ cost curve.

marginal private

Marginal revenue product is the

marginal revenue from hiring an additional worker

An employer's labor demand curve is equal to the

marginal revenue product curve

The marginal private benefit plus the marginal external benefit equals the ____ benefit.

marginal social

Marginal social cost equals marginal _____ cost plus marginal _____ cost.

private; external

With a _____ number of sellers in a market, _____ market power tends to exist in the market.

smaller; more

The _________________ measures how people respond to a change in relative prices when the wage rises.

substitution effect

In a labor market, workers _____ labor, and employers _____ labor.

supply; demand

An efficiency wage improves efficiency when:

the increase in worker effort and reduced turnover cover the cost of the higher wage

An employer should hire one more worker if

the marginal benefit exceeds the marginal cost

What is the amount of a corrective tax that would resolve a negative externality problem?

the marginal external cost

In a natural monopoly, what deters new sellers from entering the market?

the new seller would have much higher costs than the existing large seller in the market

The government increases the training requirements to obtain an electrician's license. What impact will this have in the labor market for electricians?

the supply of electricians will decrease, resulting in a higher wage and lower quantity of labor

When making labor supply decisions, your options are

working or leisure


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