ECON202 CHAPTERS 1,2,6 quiz questions

Employment rent

The economic rent a worker receives when the net value of her job exceeds the net value of her next best alternative (that is, being unemployed). Also known as: cost of job loss.

Which of the following is not a benefit of private property?

the ability to harm others with your private property

Capitalism is an economic system in which private property, markets and firms play an important role. Which of the following statements are correct?

-An economic system is a way of organising the production and distribution of goods and services in an entire economy. - A firm is an organization which purchases inputs, produces and sells outputs in order to make a profit.

Which of the following are reasons why employment contracts are incomplete?

-The firm cannot contract an employee not to leave. -The firm cannot specify every eventuality in a contract. -The firm is unable to observe exactly how an employee is fulfilling the contract.

Eden, a country, produces just two output goods: apples and snakeskin handbags. In 2014 the prices of apples and hand bags were 10 and 24, respectively. In 2015, the prices increased to 12 and 25. The quantities produced of the two goods were unchanged in both 2014 and 2015, at 100 and 20. From this information, we can conclude that:

-The nominal GDP in 2014 is 1,480. -The nominal GDP growth rate between 2014 and 2015 is 14.9% -The real GDP is unchanged between 2014 and 2015.

Which of the following are benefits to work and would be lost if an employee loses her job?

-Wage income -Firm-specific assets -The social status of being employed

Incomplete contract

A contract that does not specify, in an enforceable way, every aspect of the exchange that affects the interests of parties to the exchange (or of others).

Economic rent

A payment or other benefit received above and beyond what the individual would have received in his or her next best alternative (or reservation option). See also: reservation option.

Which country changed from the import-substitution strategy to the export-led strategy for economic growth at some point after WWII, and after they did they saw a substantial increase in growth that resulted from the shift?

China

Incentives

Economic reward or punishment, which influences the benefits and costs of alternative courses of action.

ceteris paribus

Economists often simplify analysis by setting aside things that are thought to be of less importance to the question of interest. The literal meaning of the expression is 'other things equal'. In an economic model it means an analysis 'holds other things constant'.

Asymmetric information

Information that is relevant to the parties in an economic interaction, but is known by some but not by others. See also: adverse selection, moral hazard.

Which of the following is an economic rent?

The extra profit that a successful innovator makes on bringing a new product to the market before its competitors.

Which of the following definitions is correct for an "economic system"?

The institutions that organize the production and distribution of goods and services in an entire economy.

Relative price

The price of one good or service compared to another (usually expressed as a ratio).

Reservation wage

What an employee would get in alternative employment, or from an unemployment benefit or other support, were he or she not employed in his or her current job.

Between 1980 and 2014, income inequality has __________ within most countries.

increased

The major difference between firms and markets is that firms are an entity in which there is a _____________ of power while markets are characterized by a _____________ of power.

concentration; decentralization

The cost of job loss, or ______________, is the benefit to a worker of having his or her specific job compared to his or her next best alternative.

employment rent

In the labor market, firms pay workers a wage _________ than their reservation wage in order to give them an incentive to provide more _____________.

higher; effort

Most economists agree that one cost of the rapid economic growth of the last 200 years has been the increase in _____________ such as CO2 which is correlated with increased __________________.

pollution; global temperatures