ECON 1B Ch. 10-13 Midterm #3 Review

Assume that a country with total income of $160,000 has a population of 10 households whose incomes are listed in Table: Income of Households. What percentage of income is earned by the top quintile of the population? (TO FIND) Just add the last two households percentages

69%

The graph shows the marginal social cost, demand, and supply curves in the jigsaw puzzle market. If market forces prevail, this market will produce and sell _____ units of output at a price of _____.

6; $6

The graph shows the marginal social cost, supply, and demand curves in the hand sanitizer market. At what quantity could the government set a quota to control this externality?

8

Which of the following is NOT true regarding discrimination in labor markets?

Any differences in wages between members of different racial or age groups is due to discrimination.

According to diminishing marginal utility, which of the following people would gain the lowest marginal benefit from an extra $100 of income?

Ariana, an actress with an annual household income of $1,500,000

Income Distribution in Four Countries provides recent data from the World Bank on the distribution of income in four countries. Based on the data, the country with the distribution of income that is closest to equal is: (TO FIND) The one whose bottom and middle quantile is higher than the rest.

Bangladesh.

Supermarkets need to hire fewer cashiers, due to self-checkout counters. Which graph shows what happens to the labor market for cashiers?

Graph B

Consider the labor market, predict which of the following create an incentive for investment in capital?

Higher wages

Which of the following statements describes the Coase Theorem?

If bargaining is costless, and property rights are clearly established and enforced, then externality problems can be solved through private bargaining.

Which of the following is a valid explanation of why a star movie actor earns many times more than a star Broadway actor?

In one evening, many more people can view a movie than can see a Broadway play.

What impact has technology had on the difference between the income of the best engineers and that of good engineers?

It has increased the gap in income significantly.

The marginal revenue product of labor is equal to:

MPL × P.

Average Income and Distribution of Income Data provides recent data from the World Bank on average income and the distribution of income in four countries. Based on the data in the table, those in the top quintile have the highest average income in which country? (TO FIND) The one wit the highest total household income along with the highest total top quintile earned.

Sri Lanka

Which of the following would shift the labor supply curve?

The government increases its provision of childcare services.

The population of Japan is declining. What impact will this have on the labor market for optometrists in Japan?

The optometrist labor supply curve shifts leftward.

Which of the following illustrates a positive externality?

The value of Maria's house rises when the city builds a park nearby, enhancing her view.

How does the pay of unionized workers compare with that of nonunionized workers in similar jobs, on average?

Unionized workers earn more.

Which tax is regressive? Arturo pays an 8% tax on the first $9,000 he earns plus _____ tax on any additional income.

a 5%

An externality is defined as:

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

Which of the following would be both nonrival and nonexcludable?

a siren tornado warning system

Marjean walks to work every day along a busy road. As she does so, she breathes in the fumes of many cars, often arriving at work coughing. The economic term for the impact of the cars on Marjean is

an externality.

Why does an employer's labor demand curve slope downward?

diminishing marginal product

The marginal private benefit is the:

extra benefit enjoyed by the buyer of one extra unit of a good or service.

The costs of working do NOT include what

for the job. could have been bought with the income earned.

All of the solutions to externality problems involve:

getting buyers and sellers to consider marginal external costs and benefits.

Compensating differentials lead to:

higher salaries for more unpleasant jobs.

An efficiency wage is a:

higher wage paid to encourage greater worker productivity.

The three key labor market decisions that you make do NOT include

how many workers to hire.

When the definition of poverty focuses on relative poverty, a person is in poverty if the household income is:

in the bottom 10% of household incomes in the nation.

Unions are organizations that:

jointly represent a group of workers in negotiating with employers.

Employees will be motivated to work hard and try to help their employer succeed if the company:

lives up to a core set of ideals that workers identify with.

If the demand for Ono Yo's organic frozen yogurt increases, then the _____ Ono Yo's workers will _____.

marginal revenue product of; increase

An employer who discriminates in hiring based on prejudice is likely to have higher costs than necessary because:

more productive workers may be forgone in order to hire less productive workers who have preferred characteristics.

Kaila wants her employer to pay her 20% more for making night deliveries in a high-crime neighborhood than the day delivery people receive. Most of the delivery people are willing to make night deliveries in the neighborhood for only a 10% differential. Kaila is seeking:

more than a compensating differential because she has greater concerns than most workers.

A good is characterized as _____ when one person's use of the good does not reduce another person's ability to use the same unit of the good.

nonrival

The Rational Rule for Workers is to work

one more hour as long as the wage is at least as large as the marginal benefit of another hour of leisure.

Linking your workers' earnings to their performance is called:

pay-for-performance.

In the field of economics, the observation that the living standard of a household is more stable than its income, because people think in terms of their long-term earnings as they spend, is known as:

permanent income versus current income.

A preconceived bias against a group that's not based on reason or experience is known as:

prejudice.

Studies of the minimum wage indicate that minimum wage laws _____ employment opportunities for low-skilled workers, but there is less agreement regarding _____.

reduce; the amount of the reduction

Which of the following is NOT a cost of the redistribution of income?

reduced marginal benefits to extra income

The outcome that is most efficient for society as a whole — including the interests of buyers, sellers, and bystanders — is the _____ outcome.

socially optimal

A good has a free-rider problem when:

someone can enjoy the benefits of the good without bearing the costs.

When the government requires that a person have a license to work in a particular occupation, then in the labor market for that occupation:

supply decreases.

The tragedy of the commons is the:

tendency to overconsume common resources.

In the labor market for computer programmers, the labor demand represents

the employers looking to hire programmers.

The Rational Rule for Society is that society should produce another unit of a good if:

the marginal social benefit exceeds the marginal social cost.

Externalities tend to occur because decision makers consider _____ and do NOT consider _____.

their own costs and benefits; the effects of their actions on others

In a perfectly competitive labor market, employers will not pay less than the market wage because at a wage below the equilibrium

they would not be able to hire anyone.

In a labor market graph, _____ is measured on the vertical axis, and _____ is measured on the horizontal axis.

wage; hours of labor

The opportunity cost of working is

what you would have done during the time if you were not working.