ECO 232 Final

Which would be a significant cause of income inequality in the United States?

Discrimination

The federal personal income tax is based on the:

ability to pay principle of taxation

In the short run, a profit maximizing monopolistically competitive firm sets its price:

above marginal cost

Nonprice competition refers to:

advertising, product promotion, and changes in the real and perceived characteristics of a product.

A major distinction between government purchases and government transfer payments is that:

government purchases divert resources from private uses to public uses while transfer payments do not.

Adding the economic activities of government to the circular flow model shows that:

government purchases of goods and services, taxes, and transfer payments affect how resources are allocated.

The Lorenz curve portrays:

the personal distribution of income

Price discrimination refers to:

the selling of a given product at different prices that do not reflect cost differences.

The average tax rate is the:

total tax paid divided by a comparison base

In the long run, new firms will enter a monopolistically competitive industry

until economic profits are zero

Economies and diseconomies of scale explain:

why the firm's long run average total cost curve is U-shaped

Which of the following is not a barrier to entry?

X-inefficiency

The term oligopoly means:

a few firms producing either a differentiated or a homogeneous product

Implicit costs are:

"payments" for self-employed resources

The main difference between the short run and the long run is that:

In the short run, one or more inputs are fixed.

Many people believe that monopolies charge any price they want to without affecting sales. Instead, the output level for a profit-maximizing monopoly is determined by:

Mariginal cost= marginal revenue

Allocative inefficiency due to unregulated monopoly is characterized by the condition:

P>MC

Which of the following is a public assistance or welfare program as opposed to a social insurance program?

Supplemental Security Income (SSI)

X-inefficency is said to occur when a firms:

average costs of producing any output are greater than the minimum possible average costs.

In the long run, pure competition produces:

both productive and allocative efficiency

In the short run, output:

can vary as a result of using a fixed amount of plant and equipment more or less intensively

The kinked-demand curve of an oligopolist is based on the assumption that:

competitors will follow a price cut but ignore a price increase.

Productive efficiency refers to:

cost minimization, where P = minimum ATC

The measure of the responsiveness of labor quantity to a change in the wage rate is called:

elasticity of labor demand

Cash expenditures a firm makes to pay for resources are called:

explicit costs

Critics of the mimimum wage argue that an increas in the minimum wage rate above the equilibrium rate of a purely competitive labor market would:

increase unemployment in the labor market

Game theory:

is the analysis of how people (or firms) behave in strategic situations

Income mobility

makes lifetime income inequality among income receivers in the United States less than income inequality in any single year.

If a purely competitive firm is producing at the MR = MC output level and earning an economic profit, then:

new firms will enter this market

An industrial union:

organizes unskilled workers in an industry

The federal governments greatest source of tax revenue is:

personal income taxes

An economy is producing at the least cost rate of production when:

price and minimum average total cost are equal

In the short run, purely competitive firms earn ______ in equilibrium, while in the long run, firms earn, _______ in equilibrium respectively.

profits or loses; normal profit

Government programs that pay benefits to those who are unable to earn income because of permanent disabilities or to those who have very low incomes are called:

public assistance programs

The marginal revenue product of labor is equal to:

the change in total revenue divided by the unit change in labor.