Microeconomics exam 2

How's does the market for inputs like labor differ from the market for goods and services

- firms are sellers in the market for goods and services, while individuals are sellers in the market for inputs - firms are buyers in the market for inputs, while individuals are buyers in the market for goods and services - the demand for inputs is derived from the demand for final goods and services

Which of the following is a cost associated with government intervention in an economic system ?

-corruption

What types of goods are likely to be traded in a black market?

-drug dealing -prostitution

Examples of direct regulation include_____

-price floors -zoning restrictions -antismoking laws

The primary tax systems are

-regressive tax systems -proportional tax systems -progressive tax systems

Human capital is the___

-skills and knowledge that people obtain by furthering their schooling -experience that people derive from spending more time on a job

The value of marginal product of labor (VMPL) is

-the contribution of an additional worker to a firms revenues - given by the marginal product of labor times the price of the firms output

Why are there two different views on taxation on labor supply in the United States ?

-the effect of a tax on labor supply depends on the elasticity of labor supply -it depends on normative questions such as how much to tax or how much government intervention is necessary - the effect of a tax on labor supply depends on the amount of deadweight loss is created by the tax

A black market is

A non legal market for regulated goods and services

Given that there are costs involved with government intervention in an economy, governments still choose to intervene in markets to____

Address externalities

An externality occurs when____

An economic activity affects third parties not engaged in the activity

How does the labor - leisure off determine the supply of labor

An increase in the wage rate is an increase in the opportunity cost of leisure

Which of the following is an example of a club good?

Cable TV

A government regulation that bans the use of a certain polluting technology in the production of a good is an example of a ____ used to solve an externality.

Command-and -control approach

The tragedy of the commons results when

Common pool resources are overused

Which of the following is NOT an important determined of wage inequality within an economy?

Differences in connections to influential people

Direct regulation is___

Direct actions by the government to control the amount of an activity

Which of the following statements is true

Employers are willing to forgo profits when engaging in taste-based discrimination

Which of the following correctly identifies an argument against globalization?

Globalization can lead to a loss of indigenous culture and tradition

Consumer sovereignty suggest that

Government should not interfere with consumer choices

Which of the following is a problem that black market pose in an economy ?

Governments use resources to enforce law

Classify the following goods and services as private goods, common pool resources, club goods, or public goods

Health insurance- private good Radio spectrum - common pool resource A video on YouTube - public good A mosquito control program in a city - public good A library's collection of e-books-club good

An example of a progressive tax is the

Income tax

Economists toward the paternalistic end of the spectrum would probably say that some mistakes result from the fact that

Individuals are not used to making decisions of a certain type

If an economy is producing ON the production possibilities curve, then that economy _______

Is making full use of its resources

Sara is a high school graduate, and James is a college graduate , which of the following is a true statement

James is likely to have a higher level of human capital than Sara

Which of the following is NOT an externality ?

Jordan has lung cancer from smoking cigarettes

What approach would be the least effective way to deal with the overfishing problem

Limit who is allowed to fish in the lake

A price floor is the___

Lower limit on the price of a good

A production possibilities curve show

Maximum production of one good for a given level of production of another good

An example of a proportional tax is the

Medicare tax

Which of the following statements explains the trade - off between equity and efficiency

The equity - efficiency trade - off represents the balance between ensuring an equitable allocation of resources (equity ) and increasing social surplus or total output ( efficiency )

Consumer sovereignty is the view that consumers have the right to choose___ , and the government should not interfere with these choices

The goods that they will consume

When a Pigouvian tax is imposed,

The marginal private cost curve shifts upward

If the production of a good involves negative externalities, ____

The optimal price of the good is higher than the market price of the good

A price ceiling refers to

The upper limit on the price of a good

Which of the following can result in the tragedy of the commons?

The use of common pool resources above the socially optimal level

A government would want to be on this curve where

There is no correct answer to this question, as the answer depends on a governments value judgements.

If you produce at a point beyond your PPC, then you are producing at a point that is

Unattainable

The Coase Theorem will break down when

•when property rights are not clearly defined •there are a large number of agents •transaction costs become high

Which of the following is the best description of the Coase Theorem?

Bargaining between private parties to an economic exchange results in an efficient allocation of resources

How would you depict the trade -off between equity and efficiency on a graph?

Inequality on one axis and social surplus on the other with a positively -sloped function

Is the entire burden of the tax always borne by those on whom it is imposed?

Not necessarily, since the burden of the tax depends on price elasticity

Which of the following best illustrates the tragedy of the commons ?

Overfishing in public waters

Compensating wages are the wage premiums

Paid to attract workers to occupations to otherwise undesirable jobs

Paternalism is what

People do not always know what is best for them, and government should encourage them to make the right choices

The Coase Theorem states that____

Private bargaining will result in an efficient allocation of resources.

An example of a regressive tax is the

Property tax

The government redistributes funds via transfer payments in order to

Reduce inequality among the citizens

A production possibilities curve (PPC)

Shows the relationship between the maximum production of one good for a given level of production of another good.

Why is free trade controversial ?

Some individuals may lose

A budget surplus occurs when

Tax revenue exceeds government spending

Which of the following is true?

The allocation of time and talent of individuals to bureaucracy is an important cost of government

A black market is also known as a(n) ___economy

Underground

Tax incidence refers to

Who bears the burden of a tax

Which of the following is true of the market for labor?

Workers are the suppliers of labor