Exam #3 Micro

An oil field lies beneath the border of Oklahoma and Texas. Both states drill wells 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

Which statement is TRUE about public and private-employee unions?

Only private-employee unions can call strikes, while public-employee unions tend to contribute less for their health insurance premiums.

Computer game cartridges produced in EconomyLand sell for $50 each. The same cartridges made in MarketLand have a price of $100. If free trade were allowed, we would expect the prices in both countries to:

converge to somewhere between $50 and $100

The industrial structure of cartels is an example of a(n):

cooperative game.

Which characteristic does monopolistic competition NOT have in common with perfect competition?

Products of individual firms are different.

If Rosco's Tacos competes with eight other fast-food restaurants in the same neighborhood, and two of those rival firms exit the market, then:

Rosco's demand curve will shift to the right

If Tamara is given a $3-per-hour pay increase, and in response, she decides to work more hours, then:

Tamara's work hours are represented on the upward-sloping portion of her labor supply curve.

If the economic arguments against tariffs and quotas are that they are very costly for the macroeconomy, why are they imposed?

The costs to individual consumers are small, whereas individual producers gain much from such trade barriers.

Gary Becker's theory of economic discrimination argues that:

employers who discriminate against women will lose profit opportunities.

Amtrak exhibits _____, and a can of Budweiser is a _____ product.

excludability; rival

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

A Nash equilibrium:

assumes that each player chooses his or her best strategy.

If firms in a monopolistically competitive industry are experiencing economic losses in the short run, some firms will _____ the industry, _____ demand until each firm earns a normal profit.

exit; increasing

Which action can help increase the stability of a cartel?

increase government protection

If a cartel member is considering cheating in order to earn profits, it should:

increase the quantity it sells at the quota price.

Which of these has NOT contributed to global integration?

increased nationalism

Which of the following products is likely to be the MOST differentiated?

garments sold to a retail customer

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

Which discount rate would result in society devoting the most resources to long-run environmental management?

1%

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

The effects of a quota are similar to that of a tariff in that consumers pay _____ prices and imports _____ as a result of the quota.

higher; fall

According to the segmented labor market view, unions restrict the labor supply in order to increase wages. As labor migrates to non-union markets, non-union wage rates fall. Which of these actions would reduce the incentive for firms to substitute non-union workers for union members?

increasing the minimum wage in the non-union markets

Suppose a tariff is imposed on avocados. This has the effect of _____ the domestic price of avocados, as well as having the effect of _____ the imported price of avocados.

increasing; increasing

What types of industries have been outsourced from the United States because of international trade?

industries that require a large amount of labor

Alexander Hamilton argued in the late 1700's for strong controls on imports to protect American industries from competition from more established English industries. This is an example of the _____ argument for trade restriction.

infant industry

In recent years, the United States has produced a growing share of:

intangible services

The Coase theorem claims that, in the case of tobacco:

it does not matter who is given the property rights to the air, as long as the parties involved are allowed to bargain.

Derived demand suggests that:

labor demand is derived from demand for the product it produces.

One of the reasons that competition may fail to eliminate gender wage discrimination is:

lack of mobility

Textile workers in the United States would offer which argument to restrain international trade in textiles?

low foreign wages

Spraying for mosquito control in a local community is an example of a public good because it is:

nonrival and exhibits nonexcludability.

All of these are considered negative externalities, EXCEPT:

overstock of a flu vaccine.

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.

A country has an absolute advantage in the production of a good if it can:

produce more of the good than another country

One of the main purposes of a tariff is to:

raise the price of an import above the world price.

The effects of a tariff are:

reduced quantity supplied overall, increased quantity supplied by domestic producers, and a higher price.

The tragedy of the commons applies to goods that are:

rival and nonexcludable

If the price of diesel fuel increases, the MRP curve for truck drivers will:

shift to the left

f 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.

If the United States can produce more of both bread and milk than Germany can, then:

the United States can still benefit from trade with Germany because of comparative advantage.

In a competitive labor market, if a new manufacturing plant seeks to build its labor force, it is assumed that:

the quantity of workers available is greater than the quantity of workers that are required.

The notion that individuals and firms are compelled to retaliate or punish others for engaging in noncooperative actions, but leaving the door open for future reconciliation, is BEST referred to as a(n):

tit-for-tat strategy

When nations specialize according to their comparative advantage:

total production and consumption in the world increase.

f air pollution comes from multiple sources and it causes many people to suffer, then an efficient agreement among the parties is difficult to achieve because:

transaction costs are high.

If Nintendo lowers the price of its product by $10, Sony waits to see whether Nintendo's price cut was a temporary mistake. This is an example of what type of game strategy?

trembling hand trigger

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

Which of these is both finite and nonrenewable?

Helium, gold, and copper are all finite and nonrenewable.

Which of these is an example of consumers creating a negative externality?

Litter is found in an area around a fast-food restaurant.

Which of the following is NOT a reason why standards for reducing pollution are popular?

They lead each firm to have the same abatement costs.

Which game does NOT describe a Prisoner's Dilemma outcome?

a game of chicken in which one player backs down while the other player does not

Monopolistically competitive markets and perfectly competitive markets do NOT share which characteristic?

differentiated products

n 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 nonmarket or intangible aspects of public projects.

Robotic manufacturing has made labor demand for factory workers:

more elastic

Factory jobs are no longer plentiful in the United States. This is due to all of these EXCEPT:

more foreign direct investment into the United States.

What percentage of families with small children are two-income households?

more than 50%