Final for Econ 2

Distribution control can NOT be accomplished through

Predatory Pricing

For an upward-sloping labor supply curve, the quantity of labor supplied varies directly, ceteris paribus, with

The wage rate

As the price of an existing bond increases,

the current yield decreases

A patent gives a firm the exclusive right to produce a product for how many years?

20 years

Thirty years ago in the United States, there were about ___ workers for every retired person.

4

Expected Value Equation

(1 - risk factor) x PDV

When the government requires a firm to pay an emission charge in proportion to its pollution,

Both average total costs and marginal costs rise

What is the most likely response by rials when an oligopolist cuts its price to increase its sales?

Cut their prices

Market power leads to market failure when it results in

Decrease market output

The marginal revenue product of labor curve is the firms

Demand curve for labor

In a monopolistic competition, a firm

Has a downward-sloping demand curve.

Monopolistically competitive industries are characterized by all of the following except

Homogeneous products

Price leadership

one firm sets its price first, and other firms then follow....helps achieve monopoly profit for the market

Emission charges, user fees, and pollution fines increase the _____ of polluting.

opportunity cost

Transfer payments are

payments to individuals for which no current goods or services are exchanged

Monopolist are

price makers

Requiring that a firm engage in pollution abatement will likely do all of the following except

shifting the firms ATC curve downward

External costs are the difference between

social costs and private costs

Each producer in monopolistic competition has

some market power

The expected value of a future payment differs from the present discontinued value in that the expected value

takes into account the possibility of nonpayment

Economic losses are a signal to produces

that is currently no better way to use society's scarce resources

A motivation for holding stock is

the anticipation of capital gains

External costs are

the difference between social and private costs of a market activity

When economic losses exist in the cereal market, for example, this is an indication that

the goods and services that society is giving up are more valuable than the cereal being produced

The determinants of the market supply of labor include all of the following EXCEPT

the market wage rate

When firms are independent

the profit of one firm depends on how its rivals respond to its strategic decisions

Price discrimination is best described as

the selling of and individual good at different prices to different consumers by a single seller

In a monopolistically competitive market with negative economic profits,

Firms will exit until economic profits are zero

Government intervention that fails to improve economic outcomes is known as

Government failure

The existence of income transfer programs can

Increase the wage rate as the labor supply decreases

Monopolistic competition results in allocative

Inefficiency and productive inefficiency.

How does recession impact the financial markets?

It decreases loanable funds

An individuals labor supply curve

Slopes upward initially, and then may bend backward.

A Transfer program that is event-triggered for those who are eligible or benefits is known as

Social Insurance

Which of the following programs is the largest federal income transfer program?

Social Secuity

Thermal pollution is brought about by the discharge of

Stream or heated water

The price of stock will decrease, ceteris paribus, when

Terrorists cause people to be fearful

If economic profits are earned in a competitive market, then over time

additional firms will enter the market

A bond is

an IOU

Contestable Market

an imperfectly competitive industry subject to potential entry if prices or profits increase

Current Yield Equation

annual interest payment / price of the bond

Social Security annual benefits to retirees

are higher for high income workers and lower for low income workers

When a corporation issues a bond it is,

borrowing funds from the initial buyer of the bond

The marginal revenue of a monopolist falls below price because the firm

confronts a downward sloping demand

One of the reasons for low cross price elasticity in monopolistic competition and high cross price elasticity in perfect competition is that

consumers loyal to particular brands view other available products as poor substitutes

Fewer hospital visits is not considered to be

costs of environmental clean environmental cleanup

The annual interest payment divided by the bonds price is the

current yield

If the demand for alarm clocks decreases, the effect on the alarm clock job market will be to

decrease the demand for labor and reduce equilibrium wages

In a competitive market, if the market price is equal to the minimum point of the firms ATC curve, the firm may seek to earn economic profits by

decreasing production costs through technological improvements

Price discrimination does NOT allow a producer to

designate a point above the market demand curve as the new equilibrium

Price discriminating firms charge higher prices to those who

have lower price elastics of demand

When an individuals MRP is not measurable, his or her market wage is usually determined by

his or her opportunity wage

If the government imposed a green tax on gasoline, ceteris paribus, the price of gasoline should

increase

An initial bond purchaser

lends funds directly to the bond issuer

If a monopolistically competitive firm raises its price, it will

lose some of its customers but not all

A monopolistically competitive firm will produce a

lower output and charge a higher price

In-kind transfers tend to be

more target-efficient than cash

The largest portion of Social Security expenditures is for

Retirement benefits

Bonds may be issued by the

U.S Treasury

When the government requires specific processes for reducing pollution, it is using

A command-and-control approach

Which of the following characterizes monopolistic competition?

A few firms produce all of the market supply of a good

Cost efficiency refers to the

Amount of output associated with an additional dollar spent on input

For a competitive market in the long run

Economic profits induce firms to enter until profits are normal.

If welfare benefits equal the poverty gap for each household in poverty, then

Every dollar of wages results in a lost dollar of welfare benefits

Technological improvements cause

Existing firms to produce more output.

Which market structure is characterized by a few interdependent firms?

Oligopoly

A monopolistically competitive firm maximizes profits or minimizes losses in the short run by

Producing at the output level where MR = MC

The purpose of an initial public offering is to

Raise funds for investment and growth by selling shares of the company to the public.

A monopoly realizes larger profits than a comparable competitive market by

Reducing production and pushing prices up

Welfare support creates a moral hazard by

Reducing the need to work.

The potential for maximizing total industry profits is greater in oligopolies than in perfect competition because

There are fewer firms and each is dependent on the actions of rivals

Treasury bonds typically have lower coupon rates than corporate bonds because

There is a lower risk that the U.S. Treasury will default

According to text, which of the followings form of water pollution?

Thermal pollution

Which of the following is NOT an example of an in-kind income?

Unemployment benefits

For finding marginal tax rate we use

Welfare Benefit= Maximum benefit - Wages

If payroll taxes are increased, there will be

a leftward shift of the labor supply curve

Common barrier to entry is

a patent on a new product

If the price of an ingredient in a food increases

then the market supply curve of the food will shift left

Perfectly competitive firms cannot individually affect market price because

they don't have a significant share of total output

Concentration of market power enhances research and development efforts are weak because

they need an incentive to pursue new research and development

The Herfindahl-Hirschman index is

uses to identify case worthy of antitrust concern

When there are more qualified applicants than job openings, this indicates that the

wages being offered are too high

In a perfectly competitive industry, economic profit

will approach zero in the long run as prices are driven to the level of average production costs