Q3 Chapter 7-9 Review

What are right-to-work laws?

A state law that prohibits the practice of requiring employees to join a union in order to work.

What is a union?

The United States as one country united under a single government. During the civil war "the Union" came to mean the government and armies of the north.

What are the disadvantages of sole-proprietorships?

Unlimited liability; Your small business is responsible for all debts and actions of the company.

What is the price of labor?

Wage rate

When would derived demand for labor exist?

When it is a result of some other demand.

When do wages differences usually exist?

When someone is more experienced and knowledgeable than you.

What is the law of diminishing marginal returns? How might it be observed in a small a workspace?

"Too many cooks in the kitchen" A law that states that if additional units of one resource are added to another resource in fixed supply, eventually the additional output will decrease. The more cooks you add into the kitchen, the less supplies available and the more space taken up, resulting in a decrease in output.

What is an oligopoly?

*A state of limited competition*, in which a market is shared by a *small number of producers or sellers.*

What is a monopoly?

*The exclusive possession or control* of the supply or trade in a commodity or service.

What are variable costs? What are examples of them?

A cost, or expense, that changes with the number of units of a good produced. Variable costs are based on the amount of output. Sales commissions, direct labor costs, cost of raw materials used in production, and utility costs.

What is derived demand? What is demand for workers derived from?

A demand that is the result of some other demand. It is derived from the good that workers make. - If the demand for pizza goes up, the demand for pizza employees will go up.

What is a corporation? How is it different from a partnership or a sole proprietorship?

A legal entity that can conduct business in its own name in the same way that an individual does. A partnership is a business that is owned by two people. A sole proprietorship is a business that is owned by one individual. For purposes of the law, a corporation is a living breathing entity (like an individual), even though in reality a corporation is not a living thing. If thousands of people came together to create a corporation named XYZ, the law treats XYZ if it were one person.

What is a free rider?

A person who receives the benefits of a good without paying it.

What is the shape of the supply curve for labor?

A positive slope.

Cartel agreement

An agreement that specifies how the firms that entered into the agreement will act in a coordinated way to reduce the competition among them

What is a negative externality?

An negative side affect of an action that is felt by others.

How does supply and demand explain the huge salaries of entertainers?

Because there are only so many good actors and actresses out there, the demand for them is high and the supply is low, earning them a high wage.

What is a key element in worker productivity?

Education.

If minimum wage is above equilibrium wage rate, what will happen?

Employers will hire less people because they don't want to increase their wage rate.

What is the major goal of every firm?

Every firm wants to maximize profits.

What will happened to the wage rate if Qs of labor > Qd of labor (and <)?

If there is a surplus of labor, the wage rate *falls*

In which market structure is maximizing profit the goal?

In a perfectly competitive market.

What is a government monopoly? How are they protected from competition?

Monopolies that are legally protected from competition. High barriers to entry.

Firms in which markets spend time and money differentiating their product?

Monopolistic

In what market structures are sellers price searchers?

Monopolistic Market

If a few firms dominate a market, the market structure is what?

Oligopolistic

What is a major difference between perfectly competitive markets and monopolistic competitive markets?

Perfectly competitive market: - Market consists of many buyers and sellers - Firms have easy entry into and exit out of the market. Monopolistic market: - There is only one seller. - Barriers to entry are high, meaning entry into the market is extremely difficult.

How much control do sellers have in perfectly competitive markets and monopolistic competitive markets?

Perfectly competitive markets have no control over price.

What is a private good? What is a public good?

Private Good: A good of which one person's consumption takes away from another person's consumption. - An apple, or a computer Public Good: A good of which one person's consumption does not take away from another person's consumption. - A movie theatre - A lecture in college

How is profit or loss calculated?

Profit (or loss) = Total Revenue (TR) - Total Cost (TC)

When does a shortage of labor exist? A surplus? (In terms of S and D)

Quantity demanded of labor > Quantity supplied of labor.

Who are the owners of a corporation?

Stockholders - people who buy shares of a stock in a corporation.

What is shirking?

The behavior of a worker who is putting forth less than the agreed-to effort.

Why does the government produce public goods?

The government provides nonexcludable public goods and pays for them with taxes because nobody else will.

What is a "money wage"?

The measure of a person's wage rate in terms of money.

What are products of (goods) like in a perfectly competitive market?

They are all identical.

What are antitrust laws intended to do?

They are meant to control monopoly power and to preserve and promote competition.

What does a business owner consider when deciding whether to increase production?

They consider the marginal cost of additional units.

What does the NLRB do?

They investigate unfair labor practices.

When do positive externalities occur?

They occur when a beneficial side effect of an action is felt by others.

When will a firm increase production? (answer in terms of MC and MR)

They will increase production when marginal revenue is greater than marginal cost. MR > MC

What effect will increasing your educational level have on your wages?

You will have higher wages. More education brings a higher income and a smaller probability of being unemployed.