Micro Exam 3
Belen's Bakery sells sourdough bread for $5 a loaf. Belen used 10 ovens to bake and sell 50 loaves last week. This week, she brought in one more oven and sold 56 loaves. What is the marginal revenue product of capital for the 11th oven?
$30
True or False. When creating climate change policy, decision making only needs to include the costs and benefits incurred by the current generation.
False climate change is intragenerational; sustainable policies must take into consideration the needs of this generation and the next
Which of these is an example of consumers creating a negative externality?
Litter is found in an area around a fast-food restaurant.
nonexcludable
Once a good/service is provided, everyone is excluded from using it.
In what ways does your campus recreation center resemble a public good? In what ways does it not?
Open to all students, therefore some non-excludability. Sort of excludible needs to be a student. If large and not a lot of people it is nonrival
every 100 yards, and in two weeks, the field loses all its pressure and ability to produce, leaving 80% of the oil in the ground. This consequence is an example of market failure due to:
common property resource.
Profits are maximized when _______ equals MRPK. Cost-of-capital can be simplified by using the ______, which is determined by the loanable funds market.
cost-of-capital; interest rate
According to the lecture, the two general types of unions are _____unions and ______unions.
craft; industrial
A decrease in demand for land will _______________ the price of rent.
decrease
John Nash:
developed modern game theory Nash Equilibrium
A key characteristic of monopolistic competition is __________________.
differentiated products
Cartels are more stable when:
each firm has a similar cost structure no firm can undercut the other using price
Industrial agglomeration occurs because of which economic phenomenon?
economies of scale
Which of the following is NOT an example of physical capital? -education -machinery -equipment -an office building
education
Gary Becker's theory of economic discrimination argues that:
employers who discriminate will lose profit opportunities.
One of the ways to combat common property resource problems is to
establish private property rights anything to restrict access
Riding in a Greyhound Bus exhibits _____, and a can of Coke is a _____ product.
excludability; rival
True or False. United Auto Workers represents a craft union.
false
True or False. You receive a raise from $10 to $12.50 and decide to increase your work hours to have more money. This is indicative of the income effect.
false
When interest rates are high, firms invest more.
false
True or False. Nonexcludable goods are those in which consumption by one person does not affect the consumption by another.
false non-rival goods NOT nonexcludable
Which is NOT a key assumption in competitive labor markets?
firms operate in industries with few buyers and sellers
If Nintendo lowers the price of its product by $10, Sony responds by lowering the price of its own product by $10 and chooses not to cooperate again. This is an example of what type of game strategy?
grim trigger
Type of trigger strategy where retaliation is permanent
grim trigger you cheat once, we never collude together again
Which action can help increase the stability of a cartel?
increase government protection
The discovery of natural gas in the American Midwest should lead to a(n) ____ in the price of land because of a(n) _____ land.
increase; increase in demand for
A key characteristic of oligopolies is ______________.
interdependent decision making
Occupations are broken up into predominantly male and female jobs is part of the:
job crowding hypothesis
Rent is the payment to owners of which factor of production?
land
Academic studies have found that the economic returns to education are:
large and positive
All of these are considered negative externalities, EXCEPT: -dogs barking. -noise from a neighbor's house. -overstock of flu vaccine. -cigarette smoke
overstock of flu vaccine
Intellectual property rights that protect inventions are called:
patents
The rent (on land) is determined entirely by demand because the supply of land is ________________________.
perfectly inelastic
What type of advertising influences customers emotions and drive up costs of products?
persuasive costs more, higher prices
The Dual Labor Market hypothesis splits the market into:
primary and secondary jobs
Mike constructed a beautiful backyard landscape. He also built a tall wooden fence around his yard. With the fence in place, the good that the landscape brings to the neighborhood becomes a:
private good because Mike can exclude people from enjoying the landscape.
Causes of market failure include all of the following EXCEPT the existence of: -private goods -externalities -public goods -common property resources
private goods
The goal of investment in human capital is to increase labor's:
productivity
In economics, the rewards earned by entrepreneurship are called:
profits
According to the lecture, causes of market failure include the existence of ____, _____, and _____ property resources
public goods; externalities; common
The elasticity of demand for labor measures the responsiveness of _______ to changes in ______. The ______ the demand for labor, the more likely workers will be laid off with an increase in wages.
quantity of labor demanded; wages; more elastic
All of the following are used to protect intellectual property rights except: -patents -copyrights -trademarks -quotas -industrial designs
quotas
Common property resources differ from public goods in that they are _______________.
rival
The tragedy of the commons applies to goods that are:
rival and nonexcludable.
In _______ games, actions occur at the same time. In ______ games, one player at a time makes a move.
simultaneous-move; sequential-move
According to the lecture, a market failure is when a market outcome does not provide the _____________________________________.
socially optimal level of output
If the marginal damage caused by a certain type of pollution is $100 billion and the marginal cost of abatement is $180 billion, then:
society would be better off if emissions were increased.
A right-to-work law is a:
state law making a union shop illegal.
When the individual labor supply curve is positively sloped, the _____ effect dominates and higher wages lead to _____ hours worked.
substitution; more
In an oligopoly, all the firms:
take their competitors into account when they make pricing decisions
Which of these would not be considered a Market-Based environmental policy:
the EPA setting standards on auto emissions (Command & Control)
Prisoner's dilemma occurs in a noncooperative game when:
the NE is not as good as cooperative outcome
nonrival
Consumption by one person reduces a good's utility to others.
According to the lecture, the income effect is:
when workers choose to work fewer hours as wages rise.
According to the lecture, the substitution effect is:
when workers choose to work more hours as wages rise.
Rocco's Studio offers lessons in Latin dance styles for $50 per session. Currently Rocco has three dance instructors, who were able to give a total of 40 sessions last week. This week, he hired a fourth dance instructor specializing in samba, and the four instructors together gave a total of 52 sessions. What is the marginal revenue product of the fourth dance instructor?
$600
Becky's Bakery has 3 bakers, who sold 60 doughnuts in a day. Becky hires a fourth baker, and together they sell 78 doughnuts. Each doughnut is $4. What is the marginal revenue product of the 4th baker?
$72
List types of (hypothesis/ theory) of a segmented labor market
-dual labor market hypothesis -job crowding hypothesis -insider-outsider theory
List the four types of intellectual property rights included in the lecture.
-patent -copyright -trademark -industrial designs
If wages increase at a 5% rate and the quantity demanded of labor decreases by 10%, then the elasticity of demand for labor is:
2
All of the following were enacted to combat discrimination EXCEPT the: -Administrative Review Act -Equal Pay Act -Civil Rights Act -Americans with Disabilities Act
Administrative Review Act
Which of the following does not generate a positive externality? -Decorating Your House For Halloween -Getting Your Flu Shot -Taking A Defensive Driving Course -Checking Your Email During Class -Recycling Plastic And Paper
Checking your email during class Something positive is happening to a third party.
According to the lecture, ______ and ______ are the two countries with the highest emissions of greenhouse gases.
China and United States
The act that makes it unlawful to refuse to hire a person based on their race, color, religion, sex, or national origin is the:
Civil Rights Act of 1964.
What sort of environmental policy is a law that requires all power plants to limit their carbon dioxide emissions to specified levels?
Command and control
What is human capital? Using the Human Capital Theory, who is more likely to invest in human capital? Why?
Human capital is education and skills, increasing experience is increasing human capital. Using the Human Capital Theory, younger people are more likely to invest in human capital because they have longer earning horizons. They have a longer time to invest than older people.
Which of the following statements is CORRECT? -Individual supply curves of labor are potentially backward bending, but market and industry supply curves are always positively sloped. -Individual supply curves of labor are always positively sloped, but market and industry supply curves are potentially backward bending. -Individual supply curves of labor are potentially backward bending, but market and industry supply curves are always negatively sloped. -Individual supply curves of labor are potentially backward bending, but market and industry supply curves are always vertical.
Individual supply curves of labor are potentially backward bending, but market and industry supply curves are always positively sloped.
What is meant by "industrial agglomeration"? Why is this beneficial to firms in an industry?
Industrial agglomeration is when firms are located close to other firms that are similar to one another. It is beneficial because companies can take advantage of external economies of scale. Having similar firms closer to each other takes advantage of being able to find workers more easily.
Explain why intellectual property rights are needed to protect innovation.
Intellectual property rights are needed to protect innovation so it allows them to earn profits over fixed periods
Which of the following best resembles a common property resource? -A movie theater -Satellite radio -A jogging trail -An ice cream bar -National security
Jogging trail Nonexcludable but rival
A firm will invest in additional capital goods as long as the:
MRP of capital exceeds the interest rate.
The optimal outcome for the provision of public goods is where _______ equals _____
Marginal Benefit; Marginal Costs
The two main types of environmental policies talked about in the lecture are Command & Control and ___________________________.
Market-based
Why do monopolistically competitive firms have a demand curve that is more elastic (flatter) than monopolies?
Monopolistically competitive firms have a demand curve that is more elastic than monopolies because of competition.
Negative vs Positive Externalities
Negative externalities: when something negative happens to a third party caused by a consumer. EX: pollution, noise Positive externalities: all parties benefit from a product/service (etc.). EX: Schools and education, government taxes and street lamps
Explain what physical capital is and give an example
Physical capital includes all manufactured products that are used to produce goods and services. I would say an example is Starbucks needs cappuccino machines, coffee machines, etc. I work at a water remediation company and we need equipment like water extractors, dehumidifiers, air movers, etc. to run the business.
Which describes monopolistic competition but NOT perfect competition?
Products of individual firms are different.
If the supply of land is fixed and demand falls because the economy slows, what happens to the equilibrium rent and quantity of land?
Rent falls and the quantity of land stays the same.
According to the video lecture, what are sustainable development goals?
Sustainable developmental goals is the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs. A concerned effort by individuals, businesses, and governments to recognize the cause & impacts of climate change to take appropriate actions.
If Tami is given a $2-per-hour pay increase, and in response, she decides to work more hours, then:
Tami's work hours are represented on the upward-sloping portion of her labor supply curve.
what are the benefits and costs of union membership?
The benefits of union membership are greater benefits, greater job security, and higher wages. Costs are lost wages, membership dues, and loss of some individual flexibility.
Why is the market labor supply curve positively sloped?
The market labor supply curve is positively sloped because higher wages attract more workers.
What is meant by the "tragedy of the commons"?
What is meant by "tragedy of the commons" is that overusing a common property resource for their own interest, like fishing, diminishes resources.
Which of the following statements explains the difference between a tit-for-tat trigger strategy and a grim trigger strategy?
a tit-for-tat strategy is used when one firm stops cooperating and the other firm stops cooperating temporarily
Intellectual property rights protect all of the following EXCEPT: -advertising campaigns. -inventions and innovations. -industrial designs. -creative works.
advertising campaigns
A benefit of joining a union is -greater benefits -greater job security -higher wages -all answers are correct
all answers are correct
All of the following are components of a game in game theory EXCEPT: strategies payoffs players all answers listed are components
all answers listed are components
According to the lecture, what is a key assumption of competitive labor markets? -firms operate in competitive industries -all workers are regarded equally productive -information in the industry is widely available and accurate -all answers listed are key assumptions
all answers listed are key assumptions
According to Gary Becker, discrimination is economically detrimental to ________________________.
all parties involved
The Taft-Hartley Act:
allow states to pass right-to-work laws, prohibited union shops
All of the following can lead to a shift in the labor supply except: -demographic changes -nonwage aspects of the job. -an increase in the demand for a product -wages in alternative jobs
an increase in the demand for a product leads to shifts in demand
Before deciding on a pricing strategy, Worldwide Widgets consults with its market intelligence team to understand what discounts the Gargantuan Gizmo Company is offering. The model that BEST fits this industry is:
an oligopoly
Why does the price of pizza from Dominos, Pizza Hut, and Papa John's remain relatively consistent?
because increasing prices will likely not be matched by the competitors
Which of the following would be considered a positive externality?
building restoration
Non-discriminating firms:
can pay lower wages because they are choosing from a larger pool of workers (more supply = lower wages)
Cartels are agreements between firms to formally ____ on price and output. Cartels _____ overall supply to ____ prices and profits.
collude; reduce; raise
In a 2008 case before the Supreme Court regarding older power plants and how best to protect fish and aquatic organisms, Justice David Souter remarked, "The difficulty that I have is if you are going to apply . . . a cost-benefit analysis, I'm not sure how it would work. Are a thousand plankton worth a million dollars?" Justice Souter's question points out the difficulty of:
measuring the cost/ benefit of public projects.
A Nash equilibrium:
mes that each player chooses his or her best strategy.
Technological advancements in manufacturing has made labor demand for factory workers:
more elastic
All of the following are characteristics of oligopoly firms EXCEPT: -substantial barriers to entry -relatively few firms -no control over the price -mutual interdependence
no control over the price
Spraying for mosquito control in a local community is an example of a public good because it is:
nonrival and exhibits non-excludability.
A "Union Shop" is one in which:
nonunion workers can be hired but must join the union within a specific time
Economic discrimination leads to:
occupational segregation amongst groups
An individual's labor supply curve backward bending because _______________.
of the income and substitute effects.
Forgoing paid employment to obtain a university degree is a(n):
opportunity cost
Young people are more populous in colleges than middle-aged individuals because:
the opportunity cost for young people to attend college is lower than it is for middle-aged individuals
A Prisoner's Dilemma game is where _____________.
there is a cooperative option that is better than the Nash Equilibrium
You cheat on our agreement first. I cheat next. Then we leave the door open for future reconciliation (cooperation), is BEST referred to as a(n):
tit-for-tat strategy
Intellectual property rights that protect company's names and logos are called:
trademarks
The short-run profit maximization rule for monopolistic competition is the same as for competitive and monopoly firms.
true
True or False. Actions contingent on other players' past decisions is called trigger strategies.
true
True or False. The amount of time an individual is willing to work at various wage rates is called the supply of labor.
true
Common property resources are nonexcludable but rival.
true everyone can use but one persons use can affect another person's
True or False. The restaurant industry is a good example of monopolistic competition
true similar but differentiated products