micro test 4

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asymmetric information

one party in an exchange knows more about the value of the good than the party

a rival good is one where

one person's use prevents another person's ability to use the same good at the same time

a good is excludable if

people who do not pay can be easily prevented from using the good.

moral hazard example

Brenna got her computer fixed and they ended up selling her a bunch of stuff she didn't need along with it.

special interest issue

an issue that generates substantial benefits to a small group of individuals while imposing a small cost on many others

markets work best when

both buyers and sellers know what is being exchanged

a person _______ be cheaply prevented from using national defense, a ________ good

cannot, nonexcludable

adverse selection example

car market with lemons and plums

ocean tuna is an example of

common resource

sugar quotas

cost the typical family about $6 per year but provide millions of dollars of benefits to Florida sugar producers

A newly imposed binding minimum wage _____ employment

decreases

a newly imposed binding minimum wage ______ employment

decreases

unions raise wages by

decreasing supply of labor in the industry

principle agent problem

disconnect between the incentives of the agent and the principle

which type of the following types of discrimination tends to break down most eaasily

discrimination by employers

3 variables for elections

disposable income, the inflation rate, and years in office for the party in power

if the marginal product of labor is constant in labor, then a market labor demand curve is

flat

a firm is willing to hire a worker when the marginal product of labor is ________ wage

greater than the

when labor demand increases, the wage is expected to

increase

unions may _______ the wages of their members but they might _______ the wages of everyone else

increase; decrease

technology can lead to the hiring of more labor if it

increases the marginal product of labor

discrimination by customers

means that some customers might not want to do business with firms that hire certain workers

personal supply curve

is upward sloping, but can become downward sloping

if employers discriminate against red heads

it becomes more profitable to hire red heads

club

nonrival, excludable

public good

nonrival, nonexcludable

rational ignorance

the benefit of becoming fully informed is lower than the cost.

private good

rival, excludable

common resource

rival, nonexcludable

positive effects of democracy

standard of living, famine, growth

a firm will continue to hire workers as long as

the marginal product of labor is greater than the wage

if higher wages give the incentive for some workers to work fewer hours

the quantity of labor supplied in the market will still rise as new workers enter the market

public choice

the study of political behavior using economics

if window cleaning become safer

the supply for window cleaners will increase, causing the equilibrium wage to fall below $16

The market supply curve for labor is

upward sloping

excludable means

you have to pay for it to use it


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