Econ 1B Final Part 2
The primary eligibility requirement for Social Security is
Age.
Moral hazard is
An incentive to engage in undesirable behavior.
The marginal revenue product establishes
An upper limit to the wage rate an employer is willing and able to pay
The marginal revenue product (MRP) establishes
An upper limit to the wage rate an employer is willing to pay
Recipients of TANF funds are identified
By the federally established poverty line.
If the Gini coefficient is greater for the United Kingdom than for Japan, we can conclude that the
Distribution of income in the United Kingdom is less equal than in Japan
When quotas are eliminated, losers include
Domestic producers
Marginal physical product diminishes as additional workers are hired because
Each worker has an increasingly smaller amount of other factors with which to work.
Horizontal equity can be determined by comparing the
Effective tax rates for two taxpayers with the same nominal incomes.
The purpose of the World Trade Organization (WTO) is to
Enforce the rules of free trade.
Brand loyalty
Exists even when products are virtually identical
The benefits from international trade include
Greater efficiency in the use of the world's limited resources
The intent of the 1996 Freedom to Farm Act was to accomplish all of the following except
Increase interest rates charged to farmers
If we move to the right along the upward-sloping labor supply curve, we observe that the cost of labor
Increases due to the increasing opportunity cost
Specialization in production
Increases output
Monopolistic competition results in allocative
Inefficiency and productive inefficiency.
A country has a comparative advantage in a good if
It can produce a good at a lower opportunity cost relative to another country. Correct
Brand loyalty usually makes the demand curve for a product
Less price-elastic.
If income is distributed equally, the
Lorenz curve is a straight line
A graphic illustration of the cumulative size distribution of income is known as the
Lorenz curve.
Government subsidies on the purchase of fertilizer by farmers result in
Lower costs of production and increased output.
The cost efficiency of labor is equal to the
MPP of labor divided by the wage rate
The equilibrium wage rate is determined by
Market labor supply and market labor demand
If economic profits are earned in a monopolistically competitive market,
More firms will enter the market.
The effective tax rate is
Never higher than the nominal tax rate
The U.S. tax system as a whole is basically
Proportional.
Nonprice competition results in
Resource misallocation.
The tax elasticity of supply measures the
Response of workers to a change in the tax rate.
Because of the law of diminishing returns, as additional workers are hired, total output
Rises at a diminishing rate initially and eventually falls.
The federal income tax is designed to
Shift the Lorenz curve inward
The market supply of labor is
The amount of labor all workers supply at different wage rates
The marginal physical product of labor is equal to
The change in total output divided by the change in quantity of labor
The marginal wage is measured by
The change in total wages paid divided by the change in the quantity of labor employed.
The main difference between perfect competition and monopolistic competition is
The degree of product differentiation
The breakeven level of income equals the
The highest level of income at which a household ceases to receive welfare benefit.
A market failure exists when an imperfection in
The market mechanism prevents an optimal outcome
A competitive firm should continue to hire workers until the MRP is equal to
The market wage rate.
The wage rate is
The payment for labor.
A country will not trade unless
The terms of trade are superior to domestic opportunities
Use the following formula to answer the indicated question:Welfare benefit = Maximum benefit - WagesA welfare system based on the welfare formula given
Will increase the risk of moral hazard
A firm that attempts to pass along the cost of higher union wages to consumers in the form of higher prices will be more successful if the price elasticity of demand for its product is
Inelastic
In-kind benefits are a way of correcting
Inequity
In-kind transfers
Provide the direct transfer of goods and services
The poverty gap is the
Shortfall between a household's actual income and the poverty threshold
Means-tested income transfer programs are referred to as
Welfare programs.
Assume that the product price is $4 per unit and that the hourly wage for workers is $12. Neither price nor wage changes with output. In Table 30.3, the marginal revenue product of the second worker hired is
$24 per hour.
Use the following formula to answer the indicated question:Benefit amount = Maximum award - 0.4 (Wages in excess of ceiling)Lucy is retired and earns $12,000 per year working part-time. She is entitled to a maximum Social Security retirement benefit of $14,000. Social Security regulations allow her to earn $9,000 and still get maximum benefits. Lucy's total income, including Social Security benefits, is
$24,800
If 10 workers will be hired by a firm at a wage rate of $15 per hour, but the 11th worker will be hired only if the wage rate falls to $14 per hour, then the marginal wage of the 11th worker is
$4 per hour
Table 30.2 shows how many hairstyling appointments a hair salon can schedule per week based on the number of stylists. In the spaces provided, compute the marginal physical product (MPP) of the hair stylists, total revenue, and marginal revenue product of the stylists, assuming that a hair stylist charges $60 per appointment. What is the marginal physical product of the fourth hairstylist?
0
Suppose Canada can produce either 300 tons of paper or 200 HDTVs, and India can produce either 200 tons of paper or 100 HDTVs. The terms of trade between the two countries will lie between
1/2 and 2/3 of an HDTV per ton of paper
In Alpha the lowest 20 percent of families receive approximately what percentage of income? (See Figure 33.1)
5 percent.
Refer to Table 26.1. In order to maximize profit, Will's Beach Ball Company should produce _______ and charge a price of _______ each
7 beach balls; $10
Social Security is an example of
A cash transfer program
When only one buyer has access to a particular labor market,
A monopsony exists
A flat tax is
A tax system in which tax rates are constant
Suppose China can produce 200 TVs or 200 DVD players. South Korea can produce either 100 TVs or 200 DVD players. In terms of TV production we can conclude that
China has a comparative advantage
The General Agreement on Tariffs and Trade (GATT)
Committed GATT members to a reduction of protectionism.
If the price for a box of kiwis is $40, the wage rate for kiwi laborers is $10 per hour, and a laborer can pick 3 boxes of kiwis per hour, the
Cost efficiency is 3/10 of a box per dollar
The principal form of direct farm income support is
Countercyclical payments.
Refer to Figure 26.4 for a monopolistically competitive firm. In the long run this firm is most likely to face
Demand2 and MR2
The Bush tax cuts of 2001-2010 reduced
The top marginal tax rate from 39.6 percent to 35 percent
Two countries with differing comparative advantages may engage in trade because
They will be able to consume more goods in total due to specialization and trade.
When interest rates rise, potential income for farmers ________ and their future income becomes _______.
falls; less valuable
A monopsonist must pay a higher net wage rate to hire additional workers because as a single
Buyer in the market, it faces an upward-sloping supply curve for labor
A goal of income transfer programs is to do all of the following except
Change how output is produced
Suppose a taxpayer has an income of $50,000 and a taxable income of $45,000, and pays $5,000 in taxes. If the taxpayer talks of being taxed at a 10 percent tax rate, she is referring to the
Effective tax rate
Dumping is said to occur when
Foreign producers sell their goods abroad at prices lower than those prevailing in their own countries.
The competitive dimension of monopolistic competition is that
Low barriers to entry tend to push economic profits toward zero
A profit-maximizing monopsonist will hire the quantity of labor where
MRP equals MFC.
Lower marginal tax rates for welfare programs will
Make more people eligible for welfare.
If new firms enter a monopolistically competitive market, the demand curves for the existing firms will
Shift to the left
Because a union is a form of monopoly, it must be concerned about the ________ slope of the demand curve for labor.
downward
Union shops are subject to potential competition
From replacement or substitute workers
If Alejandra makes $46,000 per year as a nurse and pays $7,000 in taxes while Emily makes $46,000 per year as a high school teacher and pays $6,500 in taxes, this is an example of
Horizontal inequity
Tariffs tend to reduce the volume of imports by
Making them more expensive to domestic consumers.
An oligopsony exists if
Only a few firms account for most of the industry's employment
Transfer payments are
Payments to individuals for which no current goods or services are exchanged.
Suppose a poverty program has a basic benefit of $5,000, zero deductions, and a marginal tax rate of 0.50. The breakeven level of income is
$10,000.
Assume the marginal tax rate is 10 percent for the first $30,000 of income, 15 percent for income between $30,000 and $70,000, and 20 percent for any income over $70,000. If Emily has taxable income equal to $80,000 for the year, what is her tax bill?
$11,000
Monopolistically competitive firms have a "monopoly" element to them because
Brand loyalty gives them a captive audience