Final for Econ 2
Distribution control can NOT be accomplished through
Predatory Pricing
For an upward-sloping labor supply curve, the quantity of labor supplied varies directly, ceteris paribus, with
The wage rate
As the price of an existing bond increases,
the current yield decreases
A patent gives a firm the exclusive right to produce a product for how many years?
20 years
Thirty years ago in the United States, there were about ___ workers for every retired person.
4
Expected Value Equation
(1 - risk factor) x PDV
When the government requires a firm to pay an emission charge in proportion to its pollution,
Both average total costs and marginal costs rise
What is the most likely response by rials when an oligopolist cuts its price to increase its sales?
Cut their prices
Market power leads to market failure when it results in
Decrease market output
The marginal revenue product of labor curve is the firms
Demand curve for labor
In a monopolistic competition, a firm
Has a downward-sloping demand curve.
Monopolistically competitive industries are characterized by all of the following except
Homogeneous products
Price leadership
one firm sets its price first, and other firms then follow....helps achieve monopoly profit for the market
Emission charges, user fees, and pollution fines increase the _____ of polluting.
opportunity cost
Transfer payments are
payments to individuals for which no current goods or services are exchanged
Monopolist are
price makers
Requiring that a firm engage in pollution abatement will likely do all of the following except
shifting the firms ATC curve downward
External costs are the difference between
social costs and private costs
Each producer in monopolistic competition has
some market power
The expected value of a future payment differs from the present discontinued value in that the expected value
takes into account the possibility of nonpayment
Economic losses are a signal to produces
that is currently no better way to use society's scarce resources
A motivation for holding stock is
the anticipation of capital gains
External costs are
the difference between social and private costs of a market activity
When economic losses exist in the cereal market, for example, this is an indication that
the goods and services that society is giving up are more valuable than the cereal being produced
The determinants of the market supply of labor include all of the following EXCEPT
the market wage rate
When firms are independent
the profit of one firm depends on how its rivals respond to its strategic decisions
Price discrimination is best described as
the selling of and individual good at different prices to different consumers by a single seller
In a monopolistically competitive market with negative economic profits,
Firms will exit until economic profits are zero
Government intervention that fails to improve economic outcomes is known as
Government failure
The existence of income transfer programs can
Increase the wage rate as the labor supply decreases
Monopolistic competition results in allocative
Inefficiency and productive inefficiency.
How does recession impact the financial markets?
It decreases loanable funds
An individuals labor supply curve
Slopes upward initially, and then may bend backward.
A Transfer program that is event-triggered for those who are eligible or benefits is known as
Social Insurance
Which of the following programs is the largest federal income transfer program?
Social Secuity
Thermal pollution is brought about by the discharge of
Stream or heated water
The price of stock will decrease, ceteris paribus, when
Terrorists cause people to be fearful
If economic profits are earned in a competitive market, then over time
additional firms will enter the market
A bond is
an IOU
Contestable Market
an imperfectly competitive industry subject to potential entry if prices or profits increase
Current Yield Equation
annual interest payment / price of the bond
Social Security annual benefits to retirees
are higher for high income workers and lower for low income workers
When a corporation issues a bond it is,
borrowing funds from the initial buyer of the bond
The marginal revenue of a monopolist falls below price because the firm
confronts a downward sloping demand
One of the reasons for low cross price elasticity in monopolistic competition and high cross price elasticity in perfect competition is that
consumers loyal to particular brands view other available products as poor substitutes
Fewer hospital visits is not considered to be
costs of environmental clean environmental cleanup
The annual interest payment divided by the bonds price is the
current yield
If the demand for alarm clocks decreases, the effect on the alarm clock job market will be to
decrease the demand for labor and reduce equilibrium wages
In a competitive market, if the market price is equal to the minimum point of the firms ATC curve, the firm may seek to earn economic profits by
decreasing production costs through technological improvements
Price discrimination does NOT allow a producer to
designate a point above the market demand curve as the new equilibrium
Price discriminating firms charge higher prices to those who
have lower price elastics of demand
When an individuals MRP is not measurable, his or her market wage is usually determined by
his or her opportunity wage
If the government imposed a green tax on gasoline, ceteris paribus, the price of gasoline should
increase
An initial bond purchaser
lends funds directly to the bond issuer
If a monopolistically competitive firm raises its price, it will
lose some of its customers but not all
A monopolistically competitive firm will produce a
lower output and charge a higher price
In-kind transfers tend to be
more target-efficient than cash
The largest portion of Social Security expenditures is for
Retirement benefits
Bonds may be issued by the
U.S Treasury
When the government requires specific processes for reducing pollution, it is using
A command-and-control approach
Which of the following characterizes monopolistic competition?
A few firms produce all of the market supply of a good
Cost efficiency refers to the
Amount of output associated with an additional dollar spent on input
For a competitive market in the long run
Economic profits induce firms to enter until profits are normal.
If welfare benefits equal the poverty gap for each household in poverty, then
Every dollar of wages results in a lost dollar of welfare benefits
Technological improvements cause
Existing firms to produce more output.
Which market structure is characterized by a few interdependent firms?
Oligopoly
A monopolistically competitive firm maximizes profits or minimizes losses in the short run by
Producing at the output level where MR = MC
The purpose of an initial public offering is to
Raise funds for investment and growth by selling shares of the company to the public.
A monopoly realizes larger profits than a comparable competitive market by
Reducing production and pushing prices up
Welfare support creates a moral hazard by
Reducing the need to work.
The potential for maximizing total industry profits is greater in oligopolies than in perfect competition because
There are fewer firms and each is dependent on the actions of rivals
Treasury bonds typically have lower coupon rates than corporate bonds because
There is a lower risk that the U.S. Treasury will default
According to text, which of the followings form of water pollution?
Thermal pollution
Which of the following is NOT an example of an in-kind income?
Unemployment benefits
For finding marginal tax rate we use
Welfare Benefit= Maximum benefit - Wages
If payroll taxes are increased, there will be
a leftward shift of the labor supply curve
Common barrier to entry is
a patent on a new product
If the price of an ingredient in a food increases
then the market supply curve of the food will shift left
Perfectly competitive firms cannot individually affect market price because
they don't have a significant share of total output
Concentration of market power enhances research and development efforts are weak because
they need an incentive to pursue new research and development
The Herfindahl-Hirschman index is
uses to identify case worthy of antitrust concern
When there are more qualified applicants than job openings, this indicates that the
wages being offered are too high
In a perfectly competitive industry, economic profit
will approach zero in the long run as prices are driven to the level of average production costs