econ exam

Bilateral monopoly

A market structure consisting of a monopolist and a monopsonist

what is the demand curve for a firm that is perfectly competitive

MRP curve

Trade deflection

Moving partially assembled products into a member nation of a regional trade bloc, completing assembly, and then exporting the products to other nations within the bloc in order to benefit from preferences granted by the trade bloc

The association formed to lower trade barriers and encourage trade between Canada, the US, and Mexico is known as

NAFTA

What are copyrights designed to accomplish?

Protect intellectual property rights

equilibrium wage at perfectly competitive firm

Quantity of labor supplied by all workers = quantity of labor demanded by all firms

Which of the following statements is correct?

Social Security benefits are received by people who had contributed to the fund during their active work years

the international agreement on intellectual property administered by the WTO is known as

TRIPS

What is an argument used to justify protectionism

Tariffs and quotas protect infant industries

Which of the following is a drawback to the infant industry justification for protectionism

The industries under protection may never become effecient enough to compete with foreign firms

why do monopolists hire fewer workers

The marginal benefit to the monopolist of hiring an additional worker is affected by the fact that the monopolist faces a reduction in the price charged on all units in order to be able to sell more of the product

Which of the following statements is true about the market demand curve for labor?

The market demand curve depends upon labor productivity, the wage rate and the price of the final product.

What is a source of comparative advantage

The relative abundance of capital and labor

An agreement negotiated between two countries that places a numerical limit on the quantity of a good that can be imported by one country from another country is known as

Voluntary export restraint

The ______ is charged with overseeing and resolving International trade disputes involving information goods

World Trade Organization

union shop

a business that hires nonunion members and then make them join the union once the job starts

In the United States, income is distributed according to

a combination of the productivity standard and the needs standard

The World Trade Organization (WTO) determines that dumping has occurred if

a product is exported for a lower price than it sells for in a home market

When examining the financial status of households, wealth is

a stock variable and includes both tangible assets and human capital

determinants of income differences

age, marginal productivity, inheritance, discrimination

reasons for rising health care costs

aging us population, higher priced medical technologies, and third party financing of health care expenditures

A product produced in a foreign country and purchased by residents of the home country is called

an import

reasons for labor demand curve to shift in perfectly competitive market

change in demand for final product, change in labor productivity, and change in the price of related factors

Marginal product of labor

change in output resulting from the addition of one more worker

MFC equation

change in total cost/ change in amount of resources used

MP equation

change in total output accounted for by hiring the worker

reasons for labor supply curve to shift in perfectly competitive market

changes in wages in other industries, changes in working conditions, job flexibility

why can nations gain from specializing in production and engaging in International trade

comparative advantage

The General Agreement on Tariffs and Trade (GATT) was replaced by the World Trade Organization (WTO)

cover services and intellectual property

The problem of unauthorized copying of music, computer software, and videos is particularly acute in

developing countries

Critics of the North American Free Trade Agreement (NAFTA) suggest that much of the increase in exports from Mexico to the United States now involves goods that Mexico otherwise would have exported to other nations. Mexican firms choose to export the goods to the United States, the critics argue, solely because the items receive preferential treatment under NAFTA tariff rules. This can be described as

diversion of trade

In a perfectly competitive labor market, the labor supply curve facing the firm will be

downward sloping

What is the name given to the sale of a product for a price below its cost of production

dumping

Nations that use trade restrictions to pursue global environmental goals will:

encounter resistance from the WTO

If a goal of a nation's residents is to increase marginal productivity, they should increase

expenditures on education

Ultimately, imports are paid for by

exports

Will a monopolist employ fewer or more workers than a perfectly competitive industry

fewer

In the long run, imports are paid for by exports because

for the most part, foreigners want U.S. produced goods in exchange for the goods that are shipped to the United States

why are imports paid by exports in the long run

for the most part, foreigners want US produced goods in exchange for the goods that are shipped to the US

Since 1950, the volume of world trade and the volume of world real GDP

have both increased, but the volume of world trade has increased faster than the volume of world real GDP.

When a firm has monopoly power, it

hires fewer workers because its marginal revenue lies below the demand curve.

The contributive standard (merit standard) for distributing income implies that

income should be distributed according to the marginal productivity of workers.

The productivity standard fails to yield an equal distribution of income because

individuals have different abilities and skills

what are common arguments against free trade

infant industry, dumping, environmental concerns, national defense

The US has become increasingly interested in negotiating _____ when discussing International trade agreements

intellectual property rights

right to work laws

laws that make it illegal to require a union membership as a condition of employment

in a monoply is marginal revenue more than or less than price

less

taft hartley act of 1947

made all closed shops illegal and allowed union shops and allowed states to pass right to work laws

MRP equation

marginal product X marginal revenue

cost minimization equation

mp labor/ price of labor= mp of capital/ price of capital= mp of land/ price of land

The US economy is considered by the Institute for Managment Development to be the most competitive economy because

of widespread entrepreneurship

Monopsonist

one single buyer

Nearly all economies of the world are

open economies

In the US_____ pose a threat to the long term profitability of the entertainment industry

pirated movies and music

relative poverty

poverty defined according to the living standards of the majority in any given society

theories of desired income distribution

productivity standard and egalitarian

The use of trade barriers to shield domestic companies from foreign competition is called

protectionism

The purpose of the Earned Income Tax Credit Program (EITC) is to

provide rebates of Social Security taxes to low-income workers.

A numerical limit on the quantity of a good that can be imported is known as a

quota

All of the following are cited as factors in explaining U.S. competitiveness EXCEPT

reducing the federal deficit

Suppose an industry receives protection from the government in the form of tariffs. A number of years later, it is observed that the quantity supplied by domestic firms had decreased and that the domestic price was substantially greater than the world price. We could conclude that

removal of the tariff would cause domestic output to fall even further and the price to fall to consumers

closed shop

requiring employees to belong to the union before they can be hired

describe ways the nations restrict foreign trade

tariffs and quotas

One reason why protecting domestic jobs is a poor argument against free trade is because

the cost of protecting jobs is much higher than the value of the jobs

Marginal factor cost

the cost of using an additional unit of an input

All of the following are reasons for why health care costs have dramatically risen in the United States except

the increase in the supply of health care professionals

The firm's demand curve for labor is

the marginal revenue product curve for labor.

describe a lorenz curve to represent a nations income distribution

the more bowed a lorsez curve the more unequally income is distributed

absolute poverty

the point at which a household's income falls below the necessary level to purchase food to physically sustain its members

The principle that suggests that the distribution of income should be based on the contribution made by individuals to society's total output is known as

the productivity standard

role of third party payments in rising health care costs

third party financing provides an incentive to buy more healthcare than if all expenses were paid out of pocket

The original objective of Social Security was

to provide retirement fund for all persons

Suppose a new EU member begins substituting its imports from non-EU members to other EU members. This is an example of

trade diversion

Moral hazard in the health care industry increases as health care insurance deductibles decrease

true

Assume that a perfectly competitive firm faces a fixed wage rate of $4 and a constant per- unit cost of capital of $2. If the marginal product of labor and capital are 16 and 6, respectively, then to maximize profits the firm should

use relatively more capital

labor unions can ration jobs by

using a seniority system, lengthening the apprenticeship period, and instituting other rationing methods

how is wage determined in a perfectly competitive labor market

wage = MFC

why do younger workers make less than workers who are older

younger workers earn less because their productivity is lower than of older workers