Micro Final

When calculating the worthiness of a college education, one must use ___________ because the costs and benefits accumulate over time

discounted values

A pure public good is one that is _______ nonrival and nonexcludable

highly

A firm is unlikely to ____ a worker if the worker's contribution to the firm's revenue is less than his or her wage

hire

Taken together, factors like education, training, experience, intelligence, and work habits are known as

human capital

When the government transfers resources to the poor in the form of a good or service, it is called an

in-kind transfer

Arguments against programs that tax income to redistribute wealth include the one that argues these programs penalize people who are

productive

If taxpayers pay a smaller fraction of their income in taxes as their incomes rise, the tax is regressive and if taxpayers pay a larger fraction of their income in taxes as their income rise, the tax is _________ as income rises

progressive

Suppose that firms that had high rates of injury had to pay more for workers' compensation than firms with lower rates of injury This change would provide an incentive for firms to reduce

risk of injury

Concerns about relative income encourage some workers to accept risk in exchange for higher wages, and that strategy can lead to an inefficient outcome is an argument in favor of enacting workplace

safety regulations

HMO's might provide lower levels of medical treatment because they receive a fixed payment for medical services regardless of the amount of

services provided

The major difficulty with using a tax on pollution instead of a fixed percentage reduction regulation is establishing the optimal

size of the tax

Logrolling refers to the practice whereby legislators support each other's pork barrel

spending

If all firms were to pay the same premium per worker into the workers' compensation system, then firms with high injury rates would

benefit

The general rule governing the hiring of workers is to equate marginal labor costs to marginal labor

benefits

One reason that some people oppose the government's high __________ is that they believe that it will drive up interest rates and undermine the ability of private firms to invest This argument is based on crowding out

deficit spending

_________ is an example of a good that is largely nonrival and nonexcludable

Clean air

Trends in inequality is focused on the income gap between the top 1% and the bottom 20%

US families

Medical insurance covering routine medical care became common after

World War II

The greater the degree of labor market mobility and competition, the less likely the exploitation view of work place safety is

accurate

As fewer families choose to purchase insurance, the cost of premiums will rise, ensuring that fewer, and sicker, families buy insurance; this is an example of

adverse selection

A good or service that is rival but is to some extent nonexcludable is called a commons good, and a good or service that is nonrival but is excludable is referred to as a

collective good

A crowded beach without any entrance fee is a

commons good

Differences in wage rates associated with differences in working conditions are called __________ wage differentials

compensating

If a labor market does not meet the conditions of a perfectly competitive market wages may be either higher or lower than they would be in a

competitive market

According to the text, the only sensible criterion for allocating scarce health care resources is a

cost-benefit test

When private firms cancel investment programs because of increases in the interest rate caused by government borrowing it is called

crowding out

Private market incentives will tend to under provide immunization against contagious disease because external benefits will not be taken into account by

decision makers

A negative income tax involves giving all citizens a substantial lump sum payment that is reduced at a rate of less than 100% as income is

earned

If all relevant private and social costs and benefits are included in the demand and supply curves for a particular good, then imposing a tax will reduce production and consumption below the

efficient level

A reduction in the workers' marginal productivity would result in a reduction in the

equilibrium wage rate

Pay-per-view movies are an example of a nonrival but _________ good

excludable

The problems of externalities and poorly formed property rights are among several rationales for the

existence of government

Marginal product is the extra output received from the hiring of an

extra worker

Insurance that pays for all expenses generated by the insured's activity is known as_______ insurance coverage

first-dollar

The major characteristic of an HMO is medical treatment is provided for a

fixed annual payment

The combination of pork barrel spending and logrolling leads to inefficiently large

government spending

If all taxpayers pay the same amount of tax, the tax is termed a

head tax

A great deal of medical expenditure inflation, from 4% in 1940 to 14% today, has to do with the emergence of

health insurance

A group of physicians that provide healthcare services to members for a fixed annual fee is termed a

health maintenance organization

In a competitive labor market, it is observed that the equilibrium wage rate and employment level have both risen One can infer that the demand for labor has

increased

-Direct regulation of workplace safety by the Occupational Safety and Health Administration (OSHA) will result in

inefficient outcomes

he effect of widespread insurance covering routine medical care is to reduce the marginal cost of routine medical care to the

insured

Workers' compensation is a government insurance plan that provides benefits to workers injured on the

job

In competitive labor markets, firms demand labor and workers supply

labor

A group of workers who collectively bargain with employers for higher wages and better working conditions is called a

labor union

A winner-take-all labor market is one in which small differences in human capital translate into __________ in wages

large differences

Workplace safety laws are common in developed countries because policy makers believe that labor markets are not perfectly competitive and so firms may not provide the optimal

level of safety

The demand function curve for workers is dependent on the demand for the product that they

make

Using the economist's definition, to say that the amount of crime control is efficient means that the marginal benefit of the last dollar spent on crime control equals the

marginal cost

Kyle works for a perfectly competitive firm where he receives a wage rate of $15 one can infer that Kyle's value of __________ is at least $15

marginal product

The optimal number of workers for a perfectly competitive firm to hire occurs when the wage rate equals the value of

marginal product of the last worker

Pollution permit policies achieve an efficient outcome because firms have an incentive to

minimize costs

An example of a pure public good is

national defense

If a good can be consumed by one person without reducing the availability of the good to others, this good is a ________ good

non rival

If it is impossible or highly costly to prevent consumers from consuming a good when they have not paid for it, the good is a __________ good

nonexcludable

HBO shows movies without commercial interruption to people who pay for their service, this is because HBO can exclude _______ viewers

nonpaying

The union wage premium refers to the amount by which union wages exceed

nonunion wages

A labor union in the labor market is analogous to a cartel in the

output market

Compared to the taxing of pollution, pollution permits offer the advantage of allowing the public to influence the amount of pollution allowed through the purchasing of

permits

Government subsidizes education because education is thought to have

positive externalities

Water flowing in a river is a public good, but a single serving bottle of water is a _____ good

private

A good or service which is both rival and excludable is a

private good

Beyond the provision of public goods, government exists to address externalities and

property rights

A _________ tax results in the same percentage of income going to taxes as income rises

proportional

A good or service that is both highly nonrival and highly nonexcludable is a pure public good and a good or service that possesses some degree (but not a high degree) of being both nonrival and nonexcludable is a

public good

The deadweight loss from imposing a tax on a market without an externality is justified if the tax revenue creates a larger surplus gain from the provision of a

public good

If low-income households spend a larger share of their budget on food than do high-income households a tax on food is a

regressive tax

School districts in which relatively more parents choose to not have their children immunized have higher rates of the diseases for which immunization is normally

required

A minimum wage law prohibits employers from paying workers less than a specified hourly wage If the minimum wage is above the equilibrium wage there will be excess

supply of labor

Showing the movie as pay-per-view television, so viewers are charged a fee to watch programming is inefficient because pay-per-view results in loss in

surplus

An economic argument in favor of providing medical care through HMOs is that they reduce incentives for providing _________ care

unnecessary or excessive

In a competitive labor market, if a firm pays a worker less than that worker's VMP, then in the long run competing firms will be able to hire the worker away, driving wages

up to VMP

Pork barrel spending is legislation that significantly benefits a particular group of voters but costs more than the benefits to all

voters

In the market for labor, the demand function describes the number of workers a firm is willing to hire at each

wage

The system of government insurance that pays benefits to workers injured on the job is referred to as

workers' compensation